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A Disequilibrium Model of International Capital Mobility

Author

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  • Ianchovichina, Elena
  • Robert McDougall
  • Thomas W. Hertel

Abstract

Paper presented at the 2nd Annual Conference on Global Economics Analysis, Denmark, June 20-22. The paper proposes a new disequilibrium approach to modeling international capital mobility for a dynamic multi- region general equilibrium model. Key to this approach are errors in investors’ assessments of potential returns to capital, such as those recently observed in Asia. The investment theory, compatible with a simple recursive solution procedure, ensures the convergence of the model towards a stable equilibrium, brings realism into the analysis of international capital mobility and flexibility in tailoring to empirical data. The paper discusses two numerical examples, demonstrating the long- run convergence of the model and the dynamic adjustment to a deeper, longer crisis in Asia.

Suggested Citation

  • Ianchovichina, Elena & Robert McDougall & Thomas W. Hertel, 2000. "A Disequilibrium Model of International Capital Mobility," GTAP Working Papers 399, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University.
    • Handle: RePEc:gta:workpp:399
    Note: GTAP Working Paper No. 10
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    File URL: https://www.gtap.agecon.purdue.edu/resources/res_display.asp?RecordID=399
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    Cited by:

    1. Abbott, Philip & Bentzen, Jeanet & Tarp, Finn, 2006. "Vietnam’s Accession to the WTO: Lessons from Past Trade Agreements," MPRA Paper 61679, University Library of Munich, Germany.
    2. André Lemelin, 2017. "Current account balances, exchange rates, and fundamental properties of Walrasian CGE world models: A pedagogical exposition," Journal of Global Economic Analysis, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University, vol. 2(1), pages 215-324, June.
    3. Drusilla K. Brown & Robert M. Stern, 2001. "Measurement and Modeling of the Economic Effects of Trade and Investment Barriers in Services," Review of International Economics, Wiley Blackwell, vol. 9(2), pages 262-286, May.
    4. Fontagné, Lionel & Foure, Jean, 2017. "General Equilibrium in the Long Run: a Tentative Quantification of the SSP scenarios," Conference papers 332833, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    5. Robert M. Stern, 2000. "Quantifying Barriers to Trade in Services," Working Papers 470, Research Seminar in International Economics, University of Michigan.
    6. Ianchovichina, Elena & McDougall, Robert & Hertel, Thomas W., 1999. "The East Asian Crisis: A Dynamic Computable General Equilibrium Analysis," 1999 Annual meeting, August 8-11, Nashville, TN 21587, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    7. Betina Dimaranan & Elena Ianchovichina & Will Martin, 2009. "How will growth in China and India affect the world economy?," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 145(3), pages 551-571, October.
    8. Boussard, J.M. & Gérard, F. & Piketty, M.G. & Christensen, A.K. & Voituriez, T., 2002. "Agricultural trade liberalization in a world of uncertainty: Discussion of the results of a world CGE model," Conference papers 331027, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    9. Lemelin, André & Robichaud, Véronique & Decaluwé, Bernard, 2013. "Endogenous current account balances in a world CGE model with international financial assets," Economic Modelling, Elsevier, vol. 32(C), pages 146-160.
    10. Das, Gouranga Gopal & Alavalapati, Janaki, 2001. "Trade-mediated biotechnology transfer and its effective absorption: an application to the U.S. forestry sector," MPRA Paper 37254, University Library of Munich, Germany, revised 01 Feb 2002.
    11. Pratt, Stephen & Blake, Adam & Swann, Peter, 2013. "Dynamic general equilibrium model with uncertainty: Uncertainty regarding the future path of the economy," Economic Modelling, Elsevier, vol. 32(C), pages 429-439.
    12. Abbott, Philip & Bentzen, Jeanet & Tarp, Finn, 2009. "Trade and Development: Lessons from Vietnam's Past Trade Agreements," World Development, Elsevier, vol. 37(2), pages 341-353, February.

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