Consumption efficiency hypothesis and the optimality of free trade policy in a small open economy

The paper is designed to examine the optimality of the free trade policy in a small poor economy incorporating the consumption efficiency hypothesis in the simple two-by-two Heckscher-Ohlin-Samuelson (HOS) framework. It finds that the protectionist policy in the form of a tariff on the capital-intensive import-competing sector may improve social welfare and unambiguously raise the economy-wide effective employment.

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Year of publication:	2007-07-12
Authors:	Chaudhuri, Sarbajit ; Banerjee, Dibyendu
Institutions:	Volkswirtschaftliche Fakultät, Ludwig-Maximilians-Universität München
Subject:	Consumption efficiency hypothesis \| Optimality of free trade \| Protectionist policy \| Heckscher-Ohlin-Samuelson model \| Effective employment

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Extent:	application/pdf
Series:	MPRA Paper.
Type of publication:	Book / Working Paper
Classification:	J41 - Contracts: Specific Human Capital, Matching Models, Efficiency Wage Models, and Internal Labor Markets ; O15 - Human Resources; Income Distribution; Migration
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10005789328