Kiel Working Papers, Kiel Institute for World Economics
No 1820:
Creative Destruction and Unemployment in an Open Economy Model
Ignat Stepanok
Abstract: I develop a model of endogenous economic growth and search
and matching frictions in the labor market. I study the effect of trade
liberalization between two identical economies on unemployment. I solve for
two versions of the growth model, the first one where trade liberalization
has only a temporary effect on growth, a semi-endogenous growth model. In
the second version trade liberalization has a permanent effect on growth, a
fully endogenous growth model. I show that in both versions trade
liberalization has a steady state effect on unemployment that can be either
negative or positive depending on parameters
Keywords: Creative destruction, unemployment, trade liberalization; (follow links to similar papers)
JEL-Codes: O41,; J63,; F16; (follow links to similar papers)
27 pages, January 2013
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