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A general equilibrium theory of North-South trade

By Graciela Chichilnisky


This chapter presents an application of competitive general equilibrium theory of markets in the spirit of Walras, formalized in the 1950s by K. Arrow and by G. Debreu. In using general equilibrium theory to generate insight into current policy issues, it follows a tradition established by Arrow in his work on welfare economics of medical care (1963), on the organization of economic activity (1969), on the evaluation of public investment (Arrow and Lind, 1970), and in urban development (1970). The intention if to use formalized general equilibrium theory to derive general statements about the economic behavior and interrelations between two groups of countries: industrial and developing countries.The goal is to obtain simple and general results, and for this purpose we consider a styled model with the minimum of characteristics needed for the task: two regions, two produced goods, and two factors of production. Within this simple model, we explore issues of current import, such as export-led policies and the transmission of economic activity between regions.

Topics: D57 - Input-Output Tables and Analysis, D51 - Exchange and Production Economies, D60 - General
Year: 1986
DOI identifier: 10.2139/ssrn.1370686
OAI identifier: oai:mpra.ub.uni-muenchen.de:8810

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