IDEAS home Printed from https://ideas.repec.org/p/zbw/kondp2/121.html
   My bibliography  Save this paper

Dynamic adjustment in open economies

Author

Listed:
  • Meckl, Jürgen

Abstract

This paper analyzes adjustment to exogenous shocks in a dynamic version of the specific-factors model in which capital is assumed to be a quasi-fixed factor. Capital allocation is treated as an issue in investment theory, thus endogeniz-ing long-run capital stocks of industries. Convex costs of adjustment generate finite Keynesian investment demand functions which are incorporated in a two-sector trade model. Depending on the source of the exogenous shock comparative static effects are ambiguous and the adjustment path to the long-run equilib-rium may be characterized by an overadjustment of capital stocks and/or of the national product. The long-run equilibrium is almost always characterized by non-equalization of capital rentals.

Suggested Citation

  • Meckl, Jürgen, 1990. "Dynamic adjustment in open economies," Discussion Papers, Series II 121, University of Konstanz, Collaborative Research Centre (SFB) 178 "Internationalization of the Economy".
    • Handle: RePEc:zbw:kondp2:121
    as

    Download full text from publisher

    File URL: https://www.econstor.eu/bitstream/10419/101617/1/769769926.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Mussa, Michael, 1978. "Dynamic Adjustment in the Heckscher-Ohlin-Samuelson Model," Journal of Political Economy, University of Chicago Press, vol. 86(5), pages 775-791, October.
    2. Dale Jorgenson, 1967. "The Theory of Investment Behavior," NBER Chapters, in: Determinants of Investment Behavior, pages 129-175, National Bureau of Economic Research, Inc.
    3. Jones, Ronald W. & Peter Neary, J., 1984. "The positive theory of international trade," Handbook of International Economics, in: R. W. Jones & P. B. Kenen (ed.), Handbook of International Economics, edition 1, volume 1, chapter 1, pages 1-62, Elsevier.
    4. Mussa, Michael, 1982. "Imperfect factor mobility and the distribution of income," Journal of International Economics, Elsevier, vol. 12(1-2), pages 125-141, February.
    5. Jagdish N. Bhagwati, 1982. "Import Competition and Response," NBER Books, National Bureau of Economic Research, Inc, number bhag82-1, March.
    6. J. Peter Neary, 1982. "Intersectoral Capital Mobility, Wage Stickiness, and the Case for Adjustment Assistance," NBER Chapters, in: Import Competition and Response, pages 39-72, National Bureau of Economic Research, Inc.
    7. Albert, Max, 1989. "Capital mobility and costs of adjustment," Discussion Papers, Series II 96, University of Konstanz, Collaborative Research Centre (SFB) 178 "Internationalization of the Economy".
    8. Michael Rothschild, 1971. "On the Cost of Adjustment," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 85(4), pages 605-622.
    9. Meckl, Jürgen, 1989. "Investment and sector-specific capital: A dynamic approach to incomplete factor mobility," Discussion Papers, Series II 95, University of Konstanz, Collaborative Research Centre (SFB) 178 "Internationalization of the Economy".
    10. Hill, John K. & Mendez, JoseA., 1983. "Factor mobility and the general equilibrium model of production," Journal of International Economics, Elsevier, vol. 15(1-2), pages 19-26, August.
    11. Hori, Hajime & Stein, Jerome L, 1977. "International Growth with Free Trade in Equities and Goods," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 18(1), pages 83-100, February.
    12. Grossman, Gene M., 1983. "Partially mobile capital : A general approach to two-sector trade theory," Journal of International Economics, Elsevier, vol. 15(1-2), pages 1-17, August.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Albert, Max & Meckl, Jürgen, 1991. "Expectations and adjustment dynamics in a two-sector model of a small open economy," Discussion Papers, Series II 132, University of Konstanz, Collaborative Research Centre (SFB) 178 "Internationalization of the Economy".
    2. Meckl, Jürgen, 1990. "Lohnpolitik als Instrument zur Eindämmung der deutsch-deutschen Übersiedlung," Discussion Papers, Series II 110, University of Konstanz, Collaborative Research Centre (SFB) 178 "Internationalization of the Economy".

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Meckl, Jürgen, 1989. "Investment and sector-specific capital: A dynamic approach to incomplete factor mobility," Discussion Papers, Series II 95, University of Konstanz, Collaborative Research Centre (SFB) 178 "Internationalization of the Economy".
    2. Denis Delgay-Troïse, 1993. "Distorsions sur les marchés des facteurs et évolution des spécialisations internationales," Revue Économique, Programme National Persée, vol. 44(1), pages 51-70.
    3. Rossana Patrón, 1999. "The imperfect mobility of labour: Going from theory to ‘virtual’ reality. Simulations with simple trade models," Documentos de Trabajo (working papers) 2299, Department of Economics - dECON.
    4. Forteza, Alvaro & Patron, Rossana, 2003. "Trade Liberalisation with Costly Adjustment," Journal of Applied Economics, Universidad del CEMA, vol. 6(1), pages 1-31, May.
    5. Rossana Patrón, 2000. "Effects from trade with heterogeneous workers and minimum wages: numerical exercises," Documentos de Trabajo (working papers) 1700, Department of Economics - dECON.
    6. Derek Pyne, 1996. "Revealed Preference Tests of the Stolper-Samuelson Theorem," Working Papers 1997_01, York University, Department of Economics.
    7. José Manuel González-Páramo, 2005. "Imperfect factor mobility, unemployment, and the short-period incidence of a capital income tax," Hacienda Pública Española / Review of Public Economics, IEF, vol. 172(1), pages 23-59, June.
    8. Grossman, Gene M. & Helpman, Elhanan & Kircher, Philipp, 2013. "Matching and Sorting in a Global Economy," SIRE Discussion Papers 2013-69, Scottish Institute for Research in Economics (SIRE).
    9. Albert, Max, 1995. "Expectations and adjustment dynamics in the specific-factors model: Correction and extension," Discussion Papers, Series II 246, University of Konstanz, Collaborative Research Centre (SFB) 178 "Internationalization of the Economy".
    10. Gene Grossman, 2013. "Heterogeneous workers and international trade," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 149(2), pages 211-245, June.
    11. Caballero, Ricardo J. & Hammour, Mohamad L., 1996. "On the ills of adjustment," Journal of Development Economics, Elsevier, vol. 51(1), pages 161-192, October.
    12. Giordani, Paolo E. & Mariani, Fabio, 2022. "Unintended consequences: Can the rise of the educated class explain the revival of protectionism?," Journal of Economic Theory, Elsevier, vol. 200(C).
    13. René Sieber & Paul Wetterwald, 1986. "Environmental Protection and Direct Foreign Investment with Specific Factors of Production: The Case of the Small Open Economy," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 122(IV), pages 611-625, December.
    14. Albert, Max & Meckl, Jürgen, 1991. "Expectations and adjustment dynamics in a two-sector model of a small open economy," Discussion Papers, Series II 132, University of Konstanz, Collaborative Research Centre (SFB) 178 "Internationalization of the Economy".
    15. ICHIDA Toshihiro, 2015. "Trade-offs in Compensating Transfers for a Multiple-skill Model of Occupational Choice," Discussion papers 15083, Research Institute of Economy, Trade and Industry (RIETI).
    16. Pinelopi Koujianou Goldberg & Nina Pavcnik, 2007. "Distributional Effects of Globalization in Developing Countries," Journal of Economic Literature, American Economic Association, vol. 45(1), pages 39-82, March.
    17. Kandilov Ivan T, 2010. "How Import Competition Affects Displaced Workers in the U.S," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 10(1), pages 1-39, June.
    18. van Wincoop, Eric, 1995. "A note on short-term intersectoral factor immobility," Journal of Economic Dynamics and Control, Elsevier, vol. 19(4), pages 845-856, May.
    19. Mahbub Morshed, A. K. M. & Turnovsky, Stephen J., 2004. "Sectoral adjustment costs and real exchange rate dynamics in a two-sector dependent economy," Journal of International Economics, Elsevier, vol. 63(1), pages 147-177, May.
    20. Tang, Paul J. G. & Walde, Klaus, 2001. "International competition, growth and welfare," European Economic Review, Elsevier, vol. 45(8), pages 1439-1459, August.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:zbw:kondp2:121. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ZBW - Leibniz Information Centre for Economics (email available below). General contact details of provider: https://edirc.repec.org/data/fwkonde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.