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Title: |
Technological Progress, Terms of Trade, and Monopolistic Competition |
| Author: |
Chung, Chul |
| Author
Affiliation: |
School of Economics, Georgia Institute of Technology, USA |
| Source: |
International Economic Journal, March 2007, v. 21, no. 4, pp. 61-70 |
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Publication Date: |
March 2007 |
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Abstract: |
This paper examines welfare implications of technological prgoress in the new trade model with monopolistic competition. Our result shows that labor-augmenting technological progress turns the terms of trade against the growing country while capital-augmenting technological progress shifts them in favor of the growing country. Unlike the Findlay-Grubert theorem, both technological progresses are welfare-enhancing. The key channel for this welfare effect is the love of variety in the new trade model.
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