A Two-Country Model of Endogenous Growth
Abstract
We study the competitive equilibria of a two-country endogenous growth model in which the source of growth is the linearity of technology in reproducible inputs. We begin by showing that in a model with no externalities there is a unique equilibrium; however, there are multiple ways in which the social planner can allocate production plans across countries. We then introduce an externality to human capital and we show that the model has multiple equilibria that can be Pareto-ranked. In many of these equilibria there are perfectly foreseen discrete reallocations of capital from one country to another, accompanied by discrete jumps in growth rates. (Copyright: Elsevier)Download Info
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Bibliographic Info
Article provided by Elsevier for the Society for Economic Dynamics in its journal Review of Economic Dynamics.
Volume (Year): 8 (2005)
Issue (Month): 1 (January)
Pages: 68-88
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Related research
Keywords: Economic Development; Economic Growth; Open Economy Macroeconomics; Quantitative Dynamic General Equilibrium Analysis; Incomplete Markets.;Other versions of this item:
- Farmer, Roger E A & Lahiri, Amartya, 2002. "A Two-Country Model of Endogenous Growth," CEPR Discussion Papers 3245, C.E.P.R. Discussion Papers.
- E13 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Neoclassical
- O11 - Economic Development, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
- O30 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - General
- O47 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Measurement of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
References
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Citations
Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.Cited by:
- Alonso-Carrera, Jaime & Freire-Serén, María Jesús & Manzano, Baltasar, 2009. "Macroeconomic effects of the regional allocation of public capital formation," Regional Science and Urban Economics, Elsevier, vol. 39(5), pages 563-574, September.
- Fujisaki, Seiya, 2012. "Taylor rules and equilibrium determinacy in a two-country model with non-traded goods," MPRA Paper 40023, University Library of Munich, Germany.
- Roger E. A. Farmer & Amartya Lahiri, 2006.
"Economic Growth in an Interdependent World Economy,"
Economic Journal,
Royal Economic Society, vol. 116(514), pages 969-990, October.
- Farmer, Roger E A & Lahiri, Amartya, 2002. "Economic Growth in an Interdependent World Economy," CEPR Discussion Papers 3250, C.E.P.R. Discussion Papers.
- Leimbach, Marian & Edenhofer, Ottmar, 2007. "Technological spillovers within multi-region models: Intertemporal optimization beyond the Negishi approach," Economic Modelling, Elsevier, vol. 24(2), pages 272-294, March.
- Kazuo Mino, 2008. "Preference Structure and Volatility in a Financially Integrated World," Discussion Papers in Economics and Business 08-05, Osaka University, Graduate School of Economics and Osaka School of International Public Policy (OSIPP).
- Doi, Junko & Nishimura, Kazuo & Shimomura, Koji, 2007.
"A two-country dynamic model of international trade and endogenous growth: Multiple balanced growth paths and stability,"
Journal of Mathematical Economics,
Elsevier, vol. 43(3-4), pages 390-419, April.
- Junko Doi & Kazuo Nishimura & Koji Shimomura, 2006. "A two-country dynamic model of international trade and endogenous growth: multiple balanced growth paths and stability," Discussion Paper Series 188, Research Institute for Economics & Business Administration, Kobe University.
- Lee, Shun-Fa, 2010. "Tariff, Growth, and Welfare," MPRA Paper 27486, University Library of Munich, Germany.
- Mino, Kazuo, 2008. "Financial integration and volatility in a two-country world," MPRA Paper 16953, University Library of Munich, Germany.
- Jaime Alonso-Carrera & Maria Jesus Freire-Seren & Baltasar Manzano, 2008. "Macroeconomic Effects From The Regional Allocation Of Public Capital Formation," CAMA Working Papers 2008-09, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
- Fujisaki, Seiya, 2012. "Interest Rate Control Rules and Macroeconomic Stability in a Heterogeneous Two-Country Model," MPRA Paper 37017, University Library of Munich, Germany.
- Marian Leimbach & Klaus Eisenack, 2009. "A Trade Algorithm for Multi-Region Models Subject to Spillover Externalities," Computational Economics, Society for Computational Economics, vol. 33(2), pages 107-130, March.
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