General equilibrium analysis of the Eaton–Kortum model of international trade
2006; Elsevier BV; Volume: 54; Issue: 6 Linguagem: Inglês
10.1016/j.jmoneco.2006.07.006
ISSN1873-1295
AutoresFernando Álvarez, Robert E. Lucas,
Tópico(s)Fiscal Policy and Economic Growth
ResumoWe study a variation of the Eaton–Kortum model, a competitive, constant-returns-to-scale multicountry Ricardian model of trade. We establish existence and uniqueness of an equilibrium with balanced trade where each country imposes an import tariff. We analyze the determinants of the cross-country distribution of trade volumes, such as size, tariffs and distance, and compare a calibrated version of the model with data for the largest 60 economies. We use the calibrated model to estimate the gains of a world-wide trade elimination of tariffs, using the theory to explain the magnitude of the gains as well as the differential effect arising from cross-country differences in pre-liberalization tariff levels and country size.
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