Equation says that trade between any two countries is proportional to the product of their GDPs. Does

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Equation says that trade between any two countries is proportional to the product of their GDPs. Does this mean that if the GDP of every country in the world doubled, world trade would quadruple?

Tij = A x Yi * Yj /Dij,

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International Economics Theory and Policy

ISBN: 978-0273754206

9th Edition

Authors: Paul R. Krugman, Maurice Obstfeld, Marc J. Melitz

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Question Posted: Oct 24, 2012 11:36 PM

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Equation says that trade between any two countries is proportional to the product of their GDPs. Does

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No if every countrys GDP were to double world trade would not quadruple Consider a simple example wi...View the full answer

International Economics Theory and Policy

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