A Dynamic Chamberlin-Heckscher-Ohlin Model with Endogenous Time Preferences: A Note
AbstractThis 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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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 4981.
Date of creation: Sep 2007
Date of revision:
trade patterns; dynamic trade model; endogenous time preferences;
Find related papers by JEL classification:
- F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
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