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Demographics in Dynamic Heckscher-Ohlin Models: Overlapping Generations Versus Infinitely Lived Consumers

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Author Info
Claustre Bajona
Timothy J. Kehoe

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Abstract

This paper contrasts the properties of dynamic Heckscher-Ohlin models with overlapping generations with those of models with infinitely lived consumers. In both environments, if capital is mobile across countries, factor price equalization occurs after the initial period. In general, however, the properties of equilibria differ drastically across environments: With infinitely lived consumers, we find that factor prices equalize in any steady state or cycle and that, in general, there is positive trade in any steady state or cycle. With overlapping generations, in contrast, we construct examples with steady states and cycles in which factor prices are not equalized, and we find that any equilibrium that converges to a steady state or cycle with factor price equalization has no trade after a finite number of periods.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 12566.

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Date of creation: Oct 2006
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Handle: RePEc:nbr:nberwo:12566

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Find related papers by JEL classification:
F11 - International Economics - - Trade - - - Neoclassical Models of Trade
F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
O15 - Economic Development, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
O41 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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References listed on IDEAS
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  5. Bianconi, Marcelo, 1995. "On dynamic real trade models," Economics Letters, Elsevier, vol. 47(1), pages 47-52, January. [Downloadable!] (restricted)
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  7. Mussa, Michael, 1978. "Dynamic Adjustment in the Heckscher-Ohlin-Samuelson Model," Journal of Political Economy, University of Chicago Press, vol. 86(5), pages 775-91, October. [Downloadable!] (restricted)
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  10. Eric W. Bond & Kathleen Trask & Ping Wang, 2003. "Factor Accumulation and Trade: Dynamic Comparative Advantage with Endogenous Physical and Human Capital," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 44(3), pages 1041-1060, 08. [Downloadable!] (restricted)
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  13. Nishimura, Kazuo & Shimomura, Koji, 2002. "Trade and Indeterminacy in a Dynamic General Equilibrium Model," Journal of Economic Theory, Elsevier, vol. 105(1), pages 244-260, July. [Downloadable!] (restricted)
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  21. Smith, Alasdair, 1984. "Capital theory and trade theory," Handbook of International Economics, in: R. W. Jones & P. B. Kenen (ed.), Handbook of International Economics, edition 1, volume 1, chapter 6, pages 289-324 Elsevier. [Downloadable!] (restricted)
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  30. Michele Boldrin, 1988. "Paths of Optimal Accumulation in Two-Sector Models," UCLA Economics Working Papers 464, UCLA Department of Economics. [Downloadable!]
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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.)

  1. Jiandong Ju & Shang-Jin Wei, 2007. "Current Account Adjustment: Some New Theory and Evidence," NBER Working Papers 13388, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  2. Joseph Francois & Clinton R. Shiells, 2008. "Dynamic Factor Price Equalization & International Income Convergence," IMF Working Papers 08/267, International Monetary Fund. [Downloadable!]
  3. Joseph Francois & Clinton R. Shiells, 2008. "Dynamic Factor Price Equalization & International Convergence," Economics working papers 2008-20, Department of Economics, Johannes Kepler University Linz, Austria. [Downloadable!]
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