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International trade and capital accumulation in an overlapping generations model with a public intermediate good

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  • Tsuyoshi Shinozaki
  • Makoto Tawada
  • Mitsuyoshi Yanagihara

Abstract

We investigate the effects of a public intermediate good on trade patterns, capital accumulation, and the gains from trade in a two‐country, three‐sector overlapping generations model. A public intermediate good affects not only the productivity of private production but capital accumulation; thus, the results differ from those obtained in previous studies. First, opening to trade may accelerate capital accumulation in the higher‐savings country. Additionally, the country producing a public intermediate good more (which is labor‐intensive) may be the importer of the investment good (which is the most capital‐intensive). Finally, the lower‐savings country may have lower steady‐state welfare under trade.

Suggested Citation

  • Tsuyoshi Shinozaki & Makoto Tawada & Mitsuyoshi Yanagihara, 2019. "International trade and capital accumulation in an overlapping generations model with a public intermediate good," Review of International Economics, Wiley Blackwell, vol. 27(3), pages 765-785, August.
    • Handle: RePEc:bla:reviec:v:27:y:2019:i:3:p:765-785
    DOI: 10.1111/roie.12396
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    Cited by:

    1. Kojun Hamada & Akihiko Kaneko & Mitsuyoshi Yanagihara, 2022. "Fertility decline and a pay‐as‐you‐go pension system in a two‐sector model," Metroeconomica, Wiley Blackwell, vol. 73(2), pages 466-480, May.

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