Optimal growth and competitive equilibrium business cycles under decreasing returns in two-country models
AbstractThis paper investigates the interlinkage in the business cycles of large-country economies in a free-trade equilibrium. We consider a two-country, two-good, two-factor general equilibrium model withCobb-Douglas technologies and linear preferences. We also assume decreasing returns in both sectors. We first identify the determinants of each country's accumulation pattern in autarky equilibrium, and second we show how a country's business cycle may spread throughout the world once trade opens. We prove indeed that under free-trade, globalization and market integration may generate a contagion of the capital exporting country's business cycles and thus have destabilizing effects on the capital importing country.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by HAL in its series Working Papers with number halshs-00280528.
Date of creation: 19 May 2008
Date of revision:
Note: View the original document on HAL open archive server: http://halshs.archives-ouvertes.fr/halshs-00280528/en/
Contact details of provider:
Web page: http://hal.archives-ouvertes.fr/
Two-country general equilibrium model; busines cycles; capital intensities; decreasing returns;
Other versions of this item:
- Kazuo Nishimura & Alain Venditti & Makoto Yano, 2009. "Optimal Growth and Competitive Equilibrium Business Cycles under Decreasing Returns in Two-Country Models," Review of International Economics, Wiley Blackwell, vol. 17(SI), pages 371-391, 05.
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Kazuo Nishimura & Alain Venditti & Makoto Yano, 2013.
"Destabilization Effect of International Trade in a Perfect Foresight Dynamic General Equilibrium Model,"
AMSE Working Papers
1313, Aix-Marseille School of Economics, Marseille, France, revised Feb 2013.
- Kazuo Nishimura & Alain Venditti & Makoto Yano, 2013. "Destabilization Effect of International Trade in a Perfect Foresight Dynamic General Equilibrium Model," Working Papers halshs-00796692, HAL.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (CCSD).
If references are entirely missing, you can add them using this form.