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Probability-theoretic foundations of international trade models

Publication

Abstract

The model of technological ideas flow can be applied to the cross-country models of endogenous growth and trade. As shown in [1], the choice of technology in individual countries is closely linked to the country's comparative advantages, which drive the international trade.

In [1], [2] and [3], only Pareto distribution is used to describe the process of ideas flow. We develop further an approach proposed in [4] and consider the implications of properties of different probability distributions on the assumptions and conclusions of the models of international trade.