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| Takumi Naito |
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| ''Trade and growth with heterogeneous firms revisited once again'' |
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| To study the long-run growth and welfare effects of both symmetric and asymmetric trade liberalization, we extend Baldwin and Robert-Nicoud (2008) to allow for asymmetric countries. We obtain four main results. First, the dynamic effect strictly dominates the static effect on expenditure if and only if the knowledge sector is active. Second, under a generalized Coe-Helpman specification, unilateral trade liberalization can raise the balanced growth rate. Third, in the symmetric country case, we derive extended autarkiness ratio formulas for long-run growth and welfare. Fourth, growth-enhancing unilateral trade liberalization is not sufficient for higher long-run welfare for at most one country. |
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| Keywords: Trade and growth, Heterogeneous firms, Asymmetric countries, Unilateral trade liberalization, Endogenous growth |
JEL: F1 - Trade: General
F4 - Macroeconomic Aspects of International Trade and Finance: General |
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| Manuscript Received : Jan 19 2017 | | Manuscript Accepted : Jan 19 2017 |
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