Abstract
AbstractConventional trade models either assume full employment or suppose imperfect labor markets and attribute unemployment to the imperfectness. Needless to say, Keynesian unemployment arising from a shortage of effective demand has not been considered. In this paper, our two‐country, three‐commodity trade model determines patterns of the international division of labor, commodity terms of trade, relative wage rates and employment quantities in each country simultaneously, given the production techniques, labor endowments and effective demand. Furthermore, the model argues the significance of link commodities commonly produced in both countries and quantity adjustments without price changes in the face of demand changes.
Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
