Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
962798 | Journal of International Economics | 2008 | 13 Pages |
Abstract
We simulate numerically a trade model with labor mobility costs added, modeled in such a way as to generate gross flows in excess of net flows. Adjustment to a trade shock can be slow with plausible parameter values. In our base case, the economy moves 95% of the distance to the new steady state in approximately eight years. Gross flows have a large effect on this rate of adjustment and on the normative effects of trade. Announcing and delaying the liberalization can build - or destroy - a constituency for free trade. We study the conditions under which these contrasting outcomes occur.
Related Topics
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Economics and Econometrics
Authors
Erhan Artuç, Shubham Chaudhuri, John McLaren,