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Savings, Volume of Trade, and Growth


  • Osang, Thomas
  • Pereira, Alfredo


This paper develops a two-country dynamic general equilibrium model with endogenous growth to analyze the effects of international trade on steady-state growth. The two countries differ both in preferences and in technologies. It is shown first that both countries cannot simultaneously experience increases in consumption growth from trade. It is then shown that trade can increase output growth for both countries if the attitude towards saving matches the change in the terms of trade in each country. A country facing a decline (rise) in its output price grows faster if its intertemporal elasticity of substitution is sufficiently low (high). Copyright 1997 by Blackwell Publishing Ltd.

Suggested Citation

  • Osang, Thomas & Pereira, Alfredo, 1997. "Savings, Volume of Trade, and Growth," Review of International Economics, Wiley Blackwell, vol. 5(3), pages 310-323, August.
  • Handle: RePEc:bla:reviec:v:5:y:1997:i:3:p:310-23

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    Cited by:

    1. Hiroaki Sasaki, 2008. "North-South Asymmetry in Returns to Scale, Uneven Development, and the Population Puzzle," TERG Discussion Papers 238, Graduate School of Economics and Management, Tohoku University.

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