Trade Agreements, Bargaining and Economic Growth

Yishay Maoz, Dan Peled () and Assaf Sarid

MPRA Paper from University Library of Munich, Germany

Abstract: Rebelo's two-sector endogenous growth model is embedded within a two-country international trade framework. The two countries bargain over a trade agreement that specifies: (i) the size of the foreign aid that the richer country gives to the poorer one; (ii) the terms of the international trade that takes place after the aid is given. The aid is given not because of generosity, but because it improves the capital allocation across the world and thus raises total world production. This world production surplus enables the rich country to raise its equilibrium consumption and welfare beyond their no-aid levels. To ensure it, the rich country uses a trade agreement to condition the aid on favorable terms of trade.

Keywords: International trade; Aid; Balanced Growth; Trade Agreement (search for similar items in EconPapers)
JEL-codes: F43 O41 P45 (search for similar items in EconPapers)
Date: 2009-08-30
New Economics Papers: this item is included in nep-dge, nep-fdg and nep-int
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://mpra.ub.uni-muenchen.de/17064/1/MPRA_paper_17064.pdf original version (application/pdf)

Related works:
Journal Article: Trade agreements, bargaining and economic growth (2011)
Working Paper: Trade Agreements, Bargaining and Economic Growth
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:17064

Access Statistics for this paper

More papers in MPRA Paper from University Library of Munich, Germany Ludwigstraße 33, D-80539 Munich, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Joachim Winter ().