Terms-Of-Trade And The Current Account: A Two-Country/Two-Sector Growth Model

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Terms-Of-Trade And The Current Account: A Two-Country/Two-Sector Growth Model

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María Dolores Guilló () (Universidad de Alicante)

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María Dolores Guilló

Abstract

This paper examines the equilibrium relation, within the non-specialized area, between the current account and the terms-of-trade in a two-country/sector growth model. Along a convergent eqirilibrium path, this relation can have any sign depending on the trading sectors' relative factor intensities and on the steady state relative price slopes of demand for and supply of investment goods. It is also shown that a negative association between capital accumulation and the terms-of-trade for the exporter of capital intensive goods does not require an import sector growing faster than the export sector.

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Paper provided by Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie) in its series Working Papers. Serie AD with number 1995-03.

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Length: 36 pages
Date of creation: Jan 1995
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Publication status: Published by Ivie
Handle: RePEc:ivi:wpasad:1995-03

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References listed on IDEAS
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Other versions:
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Other versions:
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Other versions:
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Fernando Vega Redondo, 1991. "Technological Change And Market Structure: An Evolutionary Approach," Working Papers. Serie AD 1991-10, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie). [Downloadable!]
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Other versions:
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Backus, David K., 1993. "Interpreting comovements in the trade balance and the terms of trade," Journal of International Economics, Elsevier, vol. 34(3-4), pages 375-387, May. [Downloadable!] (restricted)
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Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

Luis Corchón & Andreu Mas-Colell, 1995. "A Note On Stability Of Best Reply And Gradient Systems With Applications To Imperfectly Competitive Models," Working Papers. Serie AD 1995-18, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie). [Downloadable!]
José Alcalde, 1995. "Exchange-Proofness or Divorce-Proofness? Stability in One-Sided Matching Markets," Working Papers. Serie AD 1995-04, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie). [Downloadable!]
Other versions:
- José Alcalde, 1994. "Exchange-proofness or divorce-proofness? Stability in one-sided matching markets," Review of Economic Design, Springer, vol. 1(1), pages 275-287, December. [Downloadable!] (restricted)

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