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AA00260492-19920002-0025.pdf
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Title |
Title |
INTERNATIONAL TRADE IN MIDDLE PRODUCTS AND THE TRANSFER PROBLEM: A RICARDIAN APPROACH
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MENA, Hugo
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Tulane University
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Keio Economic Society, Keio University
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1992
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Keio economic studies
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29
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2
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Year |
1992
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Start page |
25
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End page |
36
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Abstract |
This paper analyzes the effects of international lump-sum transfers within an undistorted two-country model, where consumables are nontraded goods, international trade takes place in intermediates, and technology is Ricardian. The factoral and commodity terms of trade must improve (deteriorate) for the donor (recipient). This secondary effect completely cancels out the primary effect, thereby making the transfer welfare neutral. Jones (1980) obtained an analogous neutrality outcome for a standard two-consumption-good, two-country-model of an exchange economy under the assumption of Leontief utility functions. The duality between these two type of models and neutrality outcomes is examined.
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