TY - JOUR
T1 - Inequality and trade
AU - Mitra, Devashish
AU - Trindade, Vitor
PY - 2005/11
Y1 - 2005/11
N2 - 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.
AB - 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.
UR - http://www.scopus.com/inward/record.url?scp=29244479209&partnerID=8YFLogxK
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U2 - 10.1111/j.0008-4085.2005.00324.x
DO - 10.1111/j.0008-4085.2005.00324.x
M3 - Article
AN - SCOPUS:29244479209
SN - 0008-4085
VL - 38
SP - 1253
EP - 1271
JO - Canadian Journal of Economics
JF - Canadian Journal of Economics
IS - 4
ER -