search query: @author Martin, L. / total: 12
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| Author: | Davidson, C. Martin, L. Matusz, S. |
| Title: | Multiple free trade equilibria in micro models of unemployment |
| Journal: | Journal of International Economics
1991 : AUG, VOL. 31:1-2, p. 157-169 |
| Index terms: | FREE TRADE UNEMPLOYMENT ECONOMIC THEORY MACROECONOMIC MODELS EQUILIBRIUM ANALYSIS |
| Language: | eng |
| Abstract: | Neoclassical theory suggests that trade patterns are linked to autarkic differences in relative opportunity costs. It is demonstrated that when the Heckscher-Ohlin-Samuelson model is extended to allow for unemployment, there are forces present that create multiple free trade equilibria, even when both countries are identical and autarkic equilibrium is unique. There is no necessary link between relative opportunity costs and trade patterns. This is illustrated by examining the properties of a simple two-sector, two-factor, two-country model with unemployment. The primary focus is on search-generated unemployment, but the analysis also applies to situations where unemployment is generated by minimum wages or implicit contracts. |
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