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Title: |
Capital Mobility, Tariffs, Unemployment and
the Real Exchange Rate |
| Author: |
Hazari, Bharat
R.; Sgro, Pasquale M. |
| Author
Affiliation: |
Deakin U |
| Source: |
International Economic Journal, Autumn 1996, v. 10, no. 3, pp. 61-80 |
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Publication Date: |
Autumn 1996 |
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Abstract: |
This paper examines the consequences of
international capital mobility for income, unemployment and the real
exchange rate in a multisectoral general equilibrium model. An important
result obtained in the standard trade model is the possibility of
immiserization of the host country as a consequence of foreign capital
inflow. This issue is re-examined in the context of a more general model
and it is established that such 'immiserization' depends critically on
rural, urban factor intensity rankings and the income elasticities of
the non-traded goods. This more general result differs from the standard
theorems where 'immiserization' depends on the capital intensity of the
imported good. This paper also highlights the importance of
disaggregating the economy into regions and goods. Under certain
plausible conditions it is also established that such foreign capital
inflows may raise the level of urban unemployment and that in our model
Dutch Disease type movements in the real exchange rate may occur in the
presence of dual labour markets. |
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