Public Spending on Industries,Private Investment and the Timing of International Trade Policy Changes

This paper incorporates public spending on industries (in terms of a durable public intermediate good) into a two-country, two-period, and two-sector, model with international labour mobility. The relationship between international trade policies, private investment, and public spending on industries has been examined. Due to international labour mobility, a policy change in one country also affect the relevant variables in the other country. The timing of the policy change is shown to be ciritical. [H30, F20]