Working Paper Series
Measurable Dynamic Gains from Trade
Abstract: Productive factors such as human and physical capital are
accumulated and trade can affect the steady-state levels of such factors.
Consequently, trade liberalization will have dynamic effects on output and
welfare as the economy moves to its new steady state, in addition to its
usual static effects. The output impact of this dynamic effect is
measurable and appears to be quite large. The welfare impact of this
dynamic effect is also measurable. The size of this dynamic gain from trade
depends on the importance of external scale economies.
Keywords: Trade liberalization; Gains from trade; Welfare; (follow links to similar papers)
JEL-Codes: D60; F11; (follow links to similar papers)
26 pages, November 1990
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