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Globalization and Volatility under Alternative Trade Structures

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  • Yunfang Hu

    (Tohoku University)

  • Kazuo Mino

    ()
    (Kyoto University)

Abstract

This 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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File URL: http://www.kier.kyoto-u.ac.jp/DP/DP791.pdf
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Bibliographic Info

Paper provided by Kyoto University, Institute of Economic Research in its series KIER Working Papers with number 791.

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Length: 26pages
Date of creation: Oct 2011
Date of revision:
Handle: RePEc:kyo:wpaper:791

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Keywords: two-country model; non-traded goods; equilibrium indeterminacy; social constant returns;

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  17. Mino, Kazuo, 2001. "Indeterminacy and Endogenous Growth with Social Constant Returns," Journal of Economic Theory, Elsevier, vol. 97(1), pages 203-222, March.
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