Trade Structure and Equilibrium Indeterminacy in a Two-Country Model
AbstractThis paper explores a dynamic two-country model with production externalities in which capital goods are not traded and international lending and borrowing are allowed. Unlike the integrated world economy model based on the Heckscher-Ohlin setting, our model yields indeterminacy of equilibrium under a wider set of parameter values than in the corresponding closed economy model. Our finding demonstrates that the assumption on trade structure would be a relevant determinant in considering the relation between globalization and economic volatility.
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Bibliographic InfoPaper provided by Kyoto University, Institute of Economic Research in its series KIER Working Papers with number 690.
Date of creation: Dec 2009
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two-country model; non-traded goods; equilibrium indeterminacy; social constant returns;
Find related papers by JEL classification:
- F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
- O41 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-01-16 (All new papers)
- NEP-DGE-2010-01-16 (Dynamic General Equilibrium)
- NEP-INT-2010-01-16 (International Trade)
- NEP-OPM-2010-01-16 (Open Economy Macroeconomic)
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