Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/92805
Authors: 
Ono, Yoshiyasu
Year of Publication: 
2006
Series/Report no.: 
ISER Discussion Paper, Institute of Social and Economic Research, Osaka University 659
Abstract: 
Using a competitive two-country two-commodity monetary model with optimizing agents in which persistent unemployment arises, this paper examines the effects of trade restrictions on consumption and employment in the two countries. When facing unemployment, a country tends to impose an import restriction so that domestic firms will increase production and raise employment. However, this policy improves the current account and hence its currency appreciates, causing its products to lose international competitiveness. Therefore, employment and consumption eventually decrease in the country while in the foreign country its currency depreciates and hence employment and consumption increase.
Subjects: 
persistent unemployment
trade restrictions
exchange-rate adjustment
dynamically optimizing agents
JEL: 
F13
F41
F42
Document Type: 
Working Paper

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