We develop a two-country growth model distinguishing between a market sector producing services that can also be home produced and a market sector producing goods without home-produced substitutes. The former is a technologically 'stagnant' sector, while the latter is subject to learning-by-doing and technological spillovers. This distinction coincides in the model with the distinction between the sector producing non-tradables and the sector producing internationally tradable goods. We study how differentials in labor tax rates across countries influence the mix of tradable and non-tradable goods that characterizes the market output of each country, thus affecting their bilateral trade balance and growth rates
Trade and growth in a two-country model with home production and uneven technological spillovers / L. Bonatti, G. Felice. - In: MANCHESTER SCHOOL. - ISSN 1463-6786. - 78:5(2010 Sep), pp. 484-509. [10.1111/j.1467-9957.2010.02205.x]
Trade and growth in a two-country model with home production and uneven technological spillovers
G. FeliceUltimo
2010
Abstract
We develop a two-country growth model distinguishing between a market sector producing services that can also be home produced and a market sector producing goods without home-produced substitutes. The former is a technologically 'stagnant' sector, while the latter is subject to learning-by-doing and technological spillovers. This distinction coincides in the model with the distinction between the sector producing non-tradables and the sector producing internationally tradable goods. We study how differentials in labor tax rates across countries influence the mix of tradable and non-tradable goods that characterizes the market output of each country, thus affecting their bilateral trade balance and growth ratesFile | Dimensione | Formato | |
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