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A Neo‐Ricardian Trade Model with Overlapping Generations *
Author(s) -
BINH TRAN NAM
Publication year - 1985
Publication title -
economic record
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.365
H-Index - 42
eISSN - 1475-4932
pISSN - 0013-0249
DOI - 10.1111/j.1475-4932.1985.tb02027.x
Subject(s) - autarky , barter , economics , overlapping generations model , production (economics) , pareto principle , bequest , compensation (psychology) , microeconomics , voting , international economics , international trade , macroeconomics , welfare , market economy , psychology , operations management , politics , political science , psychoanalysis , law
This paper develops and examines a discrete‐time two‐by‐two‐by‐two barter trading world which incorporates populations. composed of overlapping, life‐cycle‐maximizing generations; each provides an economically distinguishable factor of production. It is shown that free trade without compensation can be Pareto inferior to autarky for one country. Conditions for uncompensated free trade to take place under a majority voting system are derived. The model permits intergenerational borrowing and lending to take place domestically but not internationally.