Trade Liberalization and Heterogeneous Rates of Time Preference across Countries: A Possibility of Trade Deficits with China

Taiji Harashima

MPRA Paper from University Library of Munich, Germany

Abstract: Strategies for trade liberalization when the rates of time preference are heterogeneous across countries are examined in the framework of endogenous growth. The paper argues that the best strategy for a country with the relatively higher rate of time preference is the strategy of free trade with wielding market power if the country is large enough to wield market power because all the optimality conditions are satisfied in this case. By this strategy, the current account of the country shows persisting surpluses, which implies a possibility that China has taken this strategy.

Keywords: Trade Liberalization; Time preference; Heterogeneity; Trade deficits; China (search for similar items in EconPapers)
JEL-codes: F10 F21 F43 O24 (search for similar items in EconPapers)
Date: 2009-12-16
New Economics Papers: this item is included in nep-opm
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:19386

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