This paper presents a three-good, two-country, general equilibrium model that is consistent with several stylized facts of economic growth. The three goods are manufactures, agriculture, and services. Manufactures are subject to economies of scale. The model predicts that services, a nontraded good, must be more expensive in the country with higher per capita income. It also shows that as per capita income increases, we should expect the productivity in commodities relative to services to rise. The model is able to generate many other stylized facts of economic growth.

Journal Article Import Objective, Distortions, and Optimal Tax Structure: A Generalization Get access Arvind Panagariya Arvind Panagariya University of Maryland Search for other works by this author on: Oxford Academic Google Scholar The Quarterly Journal of Economics, Volume 98, Issue 3, August 1983, Pages 515–524, https://doi.org/10.2307/1886024 Published: 01 August 1983