Difficulty of Existing International Trade Models in Incorporating Consumption-Leisure Trade-Off
4 Pages Posted: 5 Jul 2016
Date Written: July 4, 2016
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: Suggested Citation