Difficulty of Existing International Trade Models in Incorporating Consumption-Leisure Trade-Off

4 Pages Posted: 5 Jul 2016

Date Written: July 4, 2016

Abstract

This paper argues that consumption-leisure tradeoff is difficult to include in several popular international trade models. The ones discussed are one of the Krugman's New Trade Theory models and the Eaton-Kortum trade model, and in these models, once consumption-leisure tradeoff is included, there are multiple equilibria.

Keywords: multiple equilibria, international trade models, consumption-leisure tradeoff, new trade theory, Eaton-Kortum model

JEL Classification: F11, F12, F41, F42

Suggested Citation

Kim, Bryce, Difficulty of Existing International Trade Models in Incorporating Consumption-Leisure Trade-Off (July 4, 2016). Available at SSRN: https://ssrn.com/abstract=2804659 or http://dx.doi.org/10.2139/ssrn.2804659

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