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Trade and Indeterminacy in a Dynamic General Equilibrium Model

Author

Listed:
  • Koji Shimomura

    (Research Institute for Economics & Business Administration (RIEB), Kobe Universty, Japan)

  • Kazuo Nishimura

    (Kyoto Institute of Economic Research (KIER), Kyoto University, Japan)

Abstract

This paper introduces sector-specific externalities in the Heckscher-Ohlin two-country dynamic general equilibrium model to show that indeterminacy of the equilibrium path in the would market can occur. Under certain conditions in terms of factor intensities, there are multiple equilibrium paths from the same initial distribution of capital in the world market, and the distribution of capital in the limit differs among equilibrium paths.

Suggested Citation

  • Koji Shimomura & Kazuo Nishimura, 2001. "Trade and Indeterminacy in a Dynamic General Equilibrium Model," Discussion Paper Series 117, Research Institute for Economics & Business Administration, Kobe University.
    • Handle: RePEc:kob:dpaper:117
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    File URL: https://www.rieb.kobe-u.ac.jp/academic/ra/dp/English/dp117.pdf
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    References listed on IDEAS

    as
    1. Ethier,Wilfred J. & Helpman,Elhanan & Neary,J. Peter (ed.), 1993. "Theory, Policy and Dynamics in International Trade," Cambridge Books, Cambridge University Press, number 9780521434423.
    2. Zhiqi Chen, 1992. "Long-Run Equilibria in a Dynamic Heckscher-Ohlin Model," Canadian Journal of Economics, Canadian Economics Association, vol. 25(4), pages 923-943, November.
    3. Jess Benhabib & Qinglai Meng & Kazuo Nishimura, 2012. "Indeterminacy Under Constant Returns to Scale in Multisector Economies," Springer Books, in: John Stachurski & Alain Venditti & Makoto Yano (ed.), Nonlinear Dynamics in Equilibrium Models, edition 127, chapter 0, pages 403-412, Springer.
    4. Jess Benhabib & Kazuo Nishimura, 2012. "Indeterminacy and Sunspots with Constant Returns," Springer Books, in: John Stachurski & Alain Venditti & Makoto Yano (ed.), Nonlinear Dynamics in Equilibrium Models, edition 127, chapter 0, pages 311-346, Springer.
    5. Murray C. Kemp & Masayuki Okawa, 1998. "Market Structure and Factor Price Equalization," The Japanese Economic Review, Japanese Economic Association, vol. 49(3), pages 335-339, September.
    6. Kamihigashi, Takashi, 2001. "Necessity of Transversality Conditions for Infinite Horizon Problems," Econometrica, Econometric Society, vol. 69(4), pages 995-1012, July.
    7. Bewley, Truman, 1982. "An integration of equilibrium theory and turnpike theory," Journal of Mathematical Economics, Elsevier, vol. 10(2-3), pages 233-267, September.
    8. Yano, Makoto, 1984. "The turnpike of dynamic general equilibrium paths and its insensitivity to initial conditions," Journal of Mathematical Economics, Elsevier, vol. 13(3), pages 235-254, December.
    9. Kazuo Nishimura & Makoto Yano, 2012. "Interlinkage in the Endogenous Real Business Cycles of International Economies," Springer Books, in: John Stachurski & Alain Venditti & Makoto Yano (ed.), Nonlinear Dynamics in Equilibrium Models, edition 127, chapter 0, pages 97-124, Springer.
    10. Truman Bewley, 2010. "An Integration of Equilibrium Theory and Turnpike Theory," Levine's Working Paper Archive 1381, David K. Levine.
    11. Epstein, Larry G., 1987. "A simple dynamic general equilibrium model," Journal of Economic Theory, Elsevier, vol. 41(1), pages 68-95, February.
    12. Robert A. Becker, 1980. "On the Long-Run Steady State in a Simple Dynamic Model of Equilibrium with Heterogeneous Households," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 95(2), pages 375-382.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Externalities; Economic models; Market;
    All these keywords.

    JEL classification:

    • E13 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Neoclassical
    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade

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