Neoclassical Growth and Commodity Trade
Abstract
We construct and numerically solve a dynamic Heckscher-Ohlin model in which the initial distribution of production factors in the world makes worldwide factor price equalization impossible, and leads countries to group in two diversification cones. We study the dynamics of income per capita and factor prices. Our results suggest that the Ramsey model under complete specialization overcomes several shortcomings of its autarky and factor price equalization counterparts. In comparison with the autarky model, for example, it can produce similar transitional dynamics and account for important cross-sectional differences in the levels and growth rates of income per capita while generating much smaller rental-rate differentials across countries. Moreover, it does not necessarily yield convergence in levels for identically parameterized economies. All in all, the Ramsey/Complete Specialization model seems to provide a better benchmark from which to depart when studying the dynamic behaviour of countries and cross-sectional differences in income per capita levels and growth rates.Download Info
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Bibliographic Info
Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 3322.Length:
Date of creation: Apr 2002
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Handle: RePEc:cpr:ceprdp:3322
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Related research
Keywords: convergence; economic growth; heckscher-Ohlin; international trade; simulation;Other versions of this item:
- Alejandro Cunat & Marco Maffezzoli, 2004. "Neoclassical Growth and Commodity Trade," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 7(3), pages 707-736, July.
- F10 - International Economics - - Trade - - - General
- F40 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - General
- O40 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2003-02-18 (All new papers)
- NEP-DEV-2003-02-18 (Development)
- NEP-DGE-2003-02-18 (Dynamic General Equilibrium)
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Citations
Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.Cited by:
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"Trade, Growth, and Convergence in a Dynamic Heckscher-Ohlin Model,"
NBER Working Papers
12567, National Bureau of Economic Research, Inc.
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