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Tariffs, Trade and Unemployment in a Disequilibrium Model : Issues and Policies

Abstract : This paper studies the disequilibrium transition process engaged by increased openness to trade, and the effect of institutions, market behaviors and economic policies on that transition. The issue is analyzed with a simple two country (north and south), two goods model, amended in order to take into account the time dimension of both the production and the decision processes. Investigating the consequences of a tariff decrease by means of numerical simulations, we show to what extent wage and price setting, and the degree of tightness of monetary policy affect the outcome of the disequilibrium process. The main result is that capturing the gains associated with international trade requires market behaviors and economic policies, which are rather different from what is usually prescribed.
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Submitted on : Friday, November 5, 2021 - 5:31:26 AM
Last modification on : Saturday, November 6, 2021 - 4:02:44 AM

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  • HAL Id : hal-03415836, version 1
  • SCIENCESPO : 2441/6561

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Jean-Luc Gaffard, Francesco Saraceno. Tariffs, Trade and Unemployment in a Disequilibrium Model : Issues and Policies. Journal of Evolutionary Economics, Springer Verlag (Germany), 2008, 18 (2), pp.219 - 232. ⟨hal-03415836⟩

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