A Graham-type Trade Model with Keynesian Unemployment: Simultaneous Determination of International Values, Wage Rates, and Employment Quantities

Hideo Sato

No 382, TERG Discussion Papers from Graduate School of Economics and Management, Tohoku University

Abstract: This paper provides a Graham-type trade model with Keynesian unemployment. In the real world, the existence of unemployment, the greater part of which is involuntary, is a normal state. Nevertheless, many of the conventional trade models assume full employment. Although there is a literature which focuses on the relations between international trade and unemployment, the unemployment dealt with in the literature is voluntary in the almost cases. In our model, involuntary unemployment or Keynesian unemployment occurs. Though labor endowments are given, full employment is not presupposed. Rather, employment quantities are determined simultaneously with international values and wage rates.

Pages: 40 pages
Date: 2018-01
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Persistent link: https://EconPapers.repec.org/RePEc:toh:tergaa:382

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