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Time preference and international trade

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  • Kazumichi Iwasa
  • Kazuo Nishimura

Abstract

We first consider a closed model, where households' time discount depends on externality in consumption. We can prove that there is a unique steady state, which is a saddle point. Then we extend the model to a two‐country world, and derive the condition on the effects of consumption externality under which there is a unique free trade steady state with saddle‐point stability.

Suggested Citation

  • Kazumichi Iwasa & Kazuo Nishimura, 2021. "Time preference and international trade," International Journal of Economic Theory, The International Society for Economic Theory, vol. 17(1), pages 31-45, March.
    • Handle: RePEc:bla:ijethy:v:17:y:2021:i:1:p:31-45
    DOI: 10.1111/ijet.12291
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    References listed on IDEAS

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