Peretto, Pietro F.
- Working Paper
Rights / licenseIn Copyright - Non-Commercial Use Permitted
We analyze the relative growth performance of open economies in a two-country model where different endowments of labor and a natural resource generate asymmetric trade. A resource-rich economy trades resource-based intermediates for final manufacturing goods produced by a resource-poor economy. Productivity growth in both countries is driven by endogenous innovations. The effects of a sudden increase in the resource endowment depend crucially on the elasticity of substitution between resources and labor in interme-diates production. Under substitution (complementarity), the resource boom generates higher (lower) resource income, lower (higher) employment in the resource-intensive sector, higher (lower) knowledge creation and faster (slower) growth in the resource-rich economy. The resource-poor economy adjusts to the shock by raising (reducing) the relative wage, and experiences a positive (negative) growth effect that is exclusively due to trade Show more
External linksSearch via SFX
Journal / seriesEconomics Working Paper Series
PublisherETH, Swiss Federal Institute of Technology, CER-ETH - Center of Economic Research at ETH Zurich
SubjectNatural Resources; Endogenous Technological Change; MAKROÖKONOMISCHE MODELLE (OPERATIONS RESEARCH); FREIHANDEL; ECONOMIC GROWTH; WIRTSCHAFTSWACHSTUM; FREE TRADE; MACROECONOMIC MODELS (OPERATIONS RESEARCH); Endogenous Growth; International Trade
Organisational unit03635 - Bretschger, Lucas / Bretschger, Lucas
02045 - Dep. Geistes-, Sozial- u. Staatswiss. / Dep. of Humanities, Social and Pol.Sc.
MoreShow all metadata