Dynamic Factor Price Equalization & International Income Convergence
AbstractThe paper develops a tractable way to incorporate the micro structure of dual models of international trade into a standard class of dynamic open-economy macro models. In the process, it develops the concept of a dynamic factor price equalization set and an integrated intertemporal equilibrium. A number of results are obtained concerning trade, growth, and income convergence. Countries with higher capital/labor ratios may stay wealthier over time, both in the transition and in the new steady state. Real shocks in one country will be transmitted to the other country through the factor markets and traded goods prices.
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Bibliographic InfoPaper provided by International Monetary Fund in its series IMF Working Papers with number 08/267.
Date of creation: 01 Dec 2008
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This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-01-03 (All new papers)
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