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A Dynamic Chamberlin-Heckscher-Ohlin Model with Endogenous Time Preferences: A Note

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  • Iwasa, Kazumichi
  • Kikuchi, Toru
  • Shimomura, Koji

Abstract

This note formulates a dynamic two-country (developed and developing countries) Chamberlin-Heckscher-Ohlin model of trade with endogenous time preferences a la Uzawa (1968). We examine the relationship between initial factor endowment differences and trade patterns in the steady state. In particular, to highlight the integration of developing countries (e.g., China) into the world trading system, we concentrate on the case of asymmetric size of two countries (in terms of population). It will be shown that (i) given that the representative household in each country supplies an equal amount of labor, only intra-industry trade occurs in the steady state irrespective of differences in the number of representative households and that (ii) the number of households being equal, the country with less labor efficiency becomes the net exporter of the capital-intensive good.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 4981.

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Date of creation: Sep 2007
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Handle: RePEc:pra:mprapa:4981

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Keywords: trade patterns; dynamic trade model; endogenous time preferences;

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  1. Ogawa, Kazuo, 1993. "Economic development and time preference schedule : The case of Japan and East Asian NICs," Journal of Development Economics, Elsevier, Elsevier, vol. 42(1), pages 175-195, October.
  2. Toru Kikuchi & Koji Shimomura, 2007. "A New Dynamic Trade Model of Increasing Returns and Monopolistic Competition," Review of Development Economics, Wiley Blackwell, Wiley Blackwell, vol. 11(2), pages 232-241, 05.
  3. Kazuo Nishimura & Koji Shimomura, 2006. "Indeterminacy in a dynamic two-country model," Economic Theory, Springer, Springer, vol. 29(2), pages 307-324, October.
  4. Koji Shimomura & Kazuo Nishimura, 2001. "Trade and Indeterminacy in a Dynamic General Equilibrium Model," Discussion Paper Series, Research Institute for Economics & Business Administration, Kobe University 117, Research Institute for Economics & Business Administration, Kobe University.
  5. Dixit, Avinash K & Stiglitz, Joseph E, 1975. "Monopolistic Competition and Optimum Product Diversity," The Warwick Economics Research Paper Series (TWERPS) 64, University of Warwick, Department of Economics.
  6. Ventura, Jaume, 1997. "Growth and Interdependence," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 112(1), pages 57-84, February.
  7. Hong, Wontack, 1988. "Time Preference in Dynamic Trade Models: An Empirical Critique," Economic Development and Cultural Change, University of Chicago Press, vol. 36(4), pages 741-51, July.
  8. Stiglitz, Joseph E, 1970. "Factor Price Equalization in a Dynamic Economy," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 78(3), pages 456-88, May-June.
  9. Zhiqi Chen, 1992. "Long-Run Equilibria in a Dynamic Heckscher-Ohlin Model," Canadian Journal of Economics, Canadian Economics Association, Canadian Economics Association, vol. 25(4), pages 923-43, November.
  10. Lawrance, Emily C, 1991. "Poverty and the Rate of Time Preference: Evidence from Panel Data," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 99(1), pages 54-77, February.
  11. Andrew Atkeson & Patrick J. Kehoe, 2000. "Paths of development for early- and late-bloomers in a dynamic Heckscher-Ohlin model," Staff Report, Federal Reserve Bank of Minneapolis 256, Federal Reserve Bank of Minneapolis.
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