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Implications of the Eaton-Kortum Model of International Trade

Robert Lucas and Fernando Alvarez

No 623, 2004 Meeting Papers from Society for Economic Dynamics

Abstract: This paper develops a general equilibrium model of world trade, based on the technology proposed by Eaton and Kortum. We study the existence and uniqueness of equilibrium. We propose and test an algorithm for calculating equilibria. We test the ability of a calibrated version of the model to account for trade volumes, and use the theory to simulate the gains from hypothetical trade liberalizations.

Keywords: trade; volume; gains (search for similar items in EconPapers)
JEL-codes: E F (search for similar items in EconPapers)
Date: 2004
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