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exam2000 - the examples you give and the theory of the...

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ARE 201 Exam. Fall 2000 Please answer all questions. Each question has equal weight. 1) An undistorted economy moves from autarky to trade. The world relative price di ff ers from the autarky price. Describe the e ff ect of trade on the real returns to factor(s) in: (i) The Ricardian model, (ii) the Heckscher Ohlin model, and (iii) the speci fi c factors model. (If you use any theorems, name them.) 2) Discuss (at least ) two circumstances where growth can be immiser- izing. Illustrate your examples graphically. Explain the relation between
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Unformatted text preview: the examples you give and the theory of the second best. Comment on the suggestion that the possibility of immiserizing growth provides an argument against the liberalization of international F ows of capital or technology. 3) Suppose that a large country makes a transfer to its trading partner. Explain how the donor’s terms of trade depend upon (i) the magnitude of the sum of the countries’ marginal propensity to import, and (ii) the stability of the pre-transfer equilibrium. 1...
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