Skill acquisition, credit constraints, and trade

Tatyana Chesnokova, Kala Krishna

Research output: Contribution to journalArticle

5 Scopus citations

Abstract

In this paper we develop a general equilibrium model where credit constraints limit the ability of agents with heterogeneous abilities and wealth to acquire skills. We identify a new effect, the induced Rybczynski effect, that works in the opposite direction from the normal supply response and may result in relative supply being downward-sloping. We analyze the effects of trade and show that under some conditions trade may reduce welfare. Finally, we study the effects of trade on income distribution and inequality.

Original languageEnglish (US)
Pages (from-to)227-238
Number of pages12
JournalInternational Review of Economics and Finance
Volume18
Issue number2
DOIs
StatePublished - Mar 1 2009

All Science Journal Classification (ASJC) codes

  • Finance
  • Economics and Econometrics

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