Autarkic Indeterminacy and Trade Determinacy
AbstractMost existing evidences for indeterminacy are obtained from analyzing models that do not consider trade. This paper considers an extension of Nishimura and Shimomura (Journal of Economic Theory, 2002) Heckscher-Ohlin framework by removing sector-specific externalities in one country while maintaining all other assumptions previously made by the authors. We show that even though indeterminacy arises under autarky, it can be eliminated when trade takes place with another country exhibiting saddle-path stability. Consequently, support for indeterminacy from calibrating an autarkic framework should be treated with some degree of caution.
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Bibliographic InfoPaper provided by National University of Singapore, Department of Economics in its series Departmental Working Papers with number wp0507.
Date of creation: Aug 2005
Date of revision:
Indeterminacy; Trade; Two-Country; Heckscher-Ohlin;
Other versions of this item:
- E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
- F00 - International Economics - - General - - - General
- F11 - International Economics - - Trade - - - Neoclassical Models of Trade
- F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
This paper has been announced in the following NEP Reports:
- NEP-ALL-2005-09-11 (All new papers)
- NEP-INT-2005-09-11 (International Trade)
- NEP-MAC-2005-09-11 (Macroeconomics)
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