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Strategic Equilibria In A Model Of Economic Growth With Input Interdependence

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  • Juan M.C. Larrosa

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type="main" xml:lang="en"> Two countries face a strategic interdependence in producing intermediate goods. Producing these intermediate goods requires both domestic capital and another imported intermediate good. Individually, both economies determine a balanced growth path by taking into account this interdependence in different grades of awareness. By allowing for strategic interactions in the analysis, we adapted a two-agent dynamic setting and find an interior Markov perfect equilibrium as well as an open-loop equilibrium reflecting these different degrees of reaction. We find that main results resemble each other but growth rates will be higher when strategies are dynamically updated.

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  • Juan M.C. Larrosa, 2012. "Strategic Equilibria In A Model Of Economic Growth With Input Interdependence," Bulletin of Economic Research, Wiley Blackwell, vol. 64(4), pages 537-548, October.
    • Handle: RePEc:bla:buecrs:v:64:y:2012:i:4:p:537-548
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