Inequality and trade

Devashish Mitra, Vitor Trindade

Research output: Contribution to journalArticle

39 Scopus citations

Abstract

We incorporate demand-side considerations in trade in a systematic but straightforward way. We do so by focusing on the role of inequality in the determination of trade flows and patterns. With non-homothetic preferences, when countries are similar in all respects but asset inequality, we find that trade is driven by specialization in consumption, not production. Besides, these assumptions allow us to generate some interesting international spillover effects of redistributive policies. Finally, we study a model of monopolistic competition and find a novel V-shaped relationship between the ratio of inter-industry to intra-industry trade and a country's inequality.

Original languageEnglish (US)
Pages (from-to)1253-1271
Number of pages19
JournalCanadian Journal of Economics
Volume38
Issue number4
DOIs
StatePublished - Nov 1 2005

ASJC Scopus subject areas

  • Economics and Econometrics

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