Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/76120
Authors: 
Hanslin, Sandra
Year of Publication: 
2008
Series/Report no.: 
Working Paper, Socioeconomic Institute, University of Zurich 0802
Abstract: 
This paper analyzes the effect of trade liberalization on government spending in a general equilibrium model with a continuum of industries supplying tradable and nontradable goods under monopolistic competition. Trade liberalization is modeled as the opening up of product markets between two countries, which may differ in total factor productivity, factor endowment and fix cost technology. In this setup, I show that the optimal provision of a public consumption good depends positively on the degree of openness. Moreover, the richer and more productive country chooses a lower optimal government share.
Subjects: 
international trade
monopolistic competition
trade openness
public expenditure
JEL: 
F12
H40
F15
Document Type: 
Working Paper

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