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

Authors

Soh Kaneko, Faculty of Economics, Oita UniversityFollow
Naoki Yoshihara, Department of Economics, University of Massachusetts, AmherstFollow

Working Paper Number

2019-05

Publication Date

2019

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.

DOI

https://doi.org/10.7275/14301394

License

UMass Amherst Open Access Policy

Recommended Citation

Kaneko, Soh and Yoshihara, Naoki, "On the General Impossibility of Persistent Unequal Exchange Free Trade Equilibria in the Pre-industrial World Economy" (2019). UMass Amherst Economics Working Papers. 263.
https://doi.org/10.7275/14301394