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On the General Impossibility of Persistent Unequal Exchange Free Trade Equilibria in the Pre-industrial World Economy

Soh Kaneko () and Naoki Yoshihara ()
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Soh Kaneko: Faculty of Economics, Oita University
Naoki Yoshihara: Department of Economics, University of Massachusetts Amherst

UMASS Amherst Economics Working Papers from University of Massachusetts Amherst, Department of Economics

Abstract: This paper analyzes the persistency of the unequal exchange of labor (UE) in international trade. An intertemporal model of a world economy is defined with a leisure preference and no discount factor. Every incompletely specialized free trade equilibrium is characterized as having non-persistent UE, which verifies the convergence of economies without relying on economic growth or diminishing returns to scale. In particular, it characterizes a sub-class of equilibria in which the sequence of real interest rates does not converge to zero, but UE tends to disappear while equivalently the distribution of capital assets tends to be equalized in the long run.

Keywords: Unequal exchange of labor; a world economy with a leisure preference; non-stationary relative prices of commodities (search for similar items in EconPapers)
JEL-codes: D51 D63 D91 (search for similar items in EconPapers)
Date: 2019
New Economics Papers: this item is included in nep-bec and nep-int
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Citations: View citations in EconPapers (4) Track citations by RSS feed

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