Resource title

Do We Have to Consider International Capital Mobility in Trade Models?

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Resource description

The traditional trade theory predicts that trade in goods perfectly substitutes for direct movement of factors. This equivalence between goods trade and factor movements, however, depends crucially on assumptions about the production. This paper establishes necessary and sufficient conditions which describe the relationship between goods trade and capital mobility in a 2x2x2 trade model with internationally mobile capital. It identifies possible ways of incorporating capital mobility into a multi-regional, multi-sectoral Computable General Equilibrium framework. The consideration of capital mobility leads to other allocational and distributional outcomes of policy scenarios if there exists differences in production technologies across regions, trade impediments, or distortions in product or factor markets.

Resource author

Katrin Springer

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Resource language

eng

Resource content type

text/html

Resource resource URL

http://hdl.handle.net/10419/17828

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Adapt according to the presented license agreement and reference the original author.