Baxter, M. (1992) Fiscal Policy, Specialization, and Trade in the Two-Sector Model: The Return of Ricardo? Journal of Political Economy, 100, 713-744.
https://doi.org/10.1086/261837

has been cited by the following article:

• TITLE: Income Distribution and Terms-of-Trade under Generalized Returns to Scale and Capital Accumulation: Implications Using Classical Equilibrium Condition

  AUTHORS: William Darity, Bidisha Lahiri

  KEYWORDS: Generalized Returns to Scale, Surplus, Produced Means of Production, North-South Trade

  JOURNAL NAME: Theoretical Economics Letters, Vol.9 No.7, October 11, 2019

  ABSTRACT: This paper examines the implications of generalized returns to scale on the long-period equilibrium in an economy with 2 goods and 2 inputs where one of the inputs is a produced means of production. The Classical definition of long-period equilibrium defined by profit rates being equalized across sectors is used for closure. The model is initially characterized for a closed economy and then extended to a flexible-wage-North and surplus-labor-South model of trade where the North produces only capital and the South produces the consumption good using Northern capital. Neither full employment in the North nor balanced-growth of the integrated economy emerges under non-constant returns to scale. We characterize income distribution between labor and capital and movements of terms-of-trade between North and South.