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Neoclassical Growth and Commodity Trade

Author

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  • Alejandro Cunat

    (LSE)

  • Marco Maffezzoli

    (IGIER)

Abstract

We construct a dynamic Heckscher-Ohlin model in which the initial distribution of production factors across economies makes factor price equalization impossible. The model produces dynamics similar to those of the neoclassical growth model. However, free trade prevents identically parameterized economies from achieving identical steady states. Although poor economies grow faster than rich economies during the transition to the steady state, the former do not catch up with the income per capita levels of the latter. A many-country version of the model exemplifies the open-economy neoclassical growth model's ability to produce interesting distribution dynamics of income per capita. (Copyright: Elsevier)

Suggested Citation

  • Alejandro Cunat & Marco Maffezzoli, 2004. "Neoclassical Growth and Commodity Trade," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 7(3), pages 707-736, July.
  • Handle: RePEc:red:issued:v:7:y:2004:i:3:p:707-736
    DOI: 10.1016/j.red.2004.01.001
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    Cited by:

    1. Lutz Arnold, 2007. "A generalized multi-country endogenous growth model," International Economics and Economic Policy, Springer, vol. 4(1), pages 61-100, April.
    2. Partha Sen, 2013. "Capital Accumulation and Convergence in a Small Open Economy," Review of International Economics, Wiley Blackwell, vol. 21(4), pages 690-704, September.
    3. Satoshi Honma & Yushi Yoshida, 2019. "Convergence in pollution terms of trade," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 28(5), pages 603-627, July.
    4. Alejandro Cuñat & Marco Maffezzoli, 2007. "Can Comparative Advantage Explain the Growth of us Trade?," Economic Journal, Royal Economic Society, vol. 117(520), pages 583-602, April.
    5. Leimbach, Marian & Edenhofer, Ottmar, 2007. "Technological spillovers within multi-region models: Intertemporal optimization beyond the Negishi approach," Economic Modelling, Elsevier, vol. 24(2), pages 272-294, March.
    6. Auer, Raphael A., 2015. "Human capital and the dynamic effects of trade," Journal of Development Economics, Elsevier, vol. 117(C), pages 107-118.
    7. Chatterjee, Partha & Shukayev, Malik, 2012. "A stochastic dynamic model of trade and growth: Convergence and diversification," Journal of Economic Dynamics and Control, Elsevier, vol. 36(3), pages 416-432.
    8. Ventura, Jaume, 2005. "A Global View of Economic Growth," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 22, pages 1419-1497, Elsevier.
    9. Claustre Bajona & Timothy J. Kehoe, 2006. "Demographics in dynamic Heckscher-Ohlin models: overlapping generations versus infinitely lived consumers," Staff Report 377, Federal Reserve Bank of Minneapolis.
    10. Claustre Bajona & Timothy Kehoe, 2010. "Trade, Growth, and Convergence in a Dynamic Heckscher-Ohlin Model," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 13(3), pages 487-513, July.
    11. Sergi Basco & Martí Mestieri, 2019. "The world income distribution: the effects of international unbundling of production," Journal of Economic Growth, Springer, vol. 24(2), pages 189-221, June.
    12. Catia Batista & Jacques Potin, 2007. "Heckscher-Ohlin Specialization and the Marginal Product of Capital, 1976-2000," Economics Series Working Papers 357, University of Oxford, Department of Economics.
    13. Sen, Partha, 2015. "Uncertain lifetimes and convergence in a two-country Heckscher–Ohlin model," Mathematical Social Sciences, Elsevier, vol. 78(C), pages 14-20.
    14. Michelle Connolly & Kei-Mu Yi, 2015. "How Much of South Korea's Growth Miracle Can Be Explained by Trade Policy?," American Economic Journal: Macroeconomics, American Economic Association, vol. 7(4), pages 188-221, October.
    15. Fabio Monteforte & Mathan Satchi & Jonathan Temple, 2019. "Development Priorities: The Relative Benefits of Agricultural Growth," Bristol Economics Discussion Papers 19/716, School of Economics, University of Bristol, UK.
    16. Lars Calmfors & Giancarlo Corsetti & Seppo Honkapohja & John Kay & Gilles Saint-Paul & Hans-Werner Sinn & Jan-Egbert Sturm & Xavier Vives, 2006. "Chapter 2: Global Imbalances," EEAG Report on the European Economy, CESifo, vol. 0, pages 50-67, March.
    17. Satoshi Honma & Yushi Yoshida, 2018. "Convergence in pollution terms of trade," Discussion Papers CRR Discussion Paper Series A: General 48, Shiga University, Faculty of Economics,Center for Risk Research.
    18. Batista, Catia & Potin, Jacques, 2008. "International Specialization and the Return to Capital, 1976-2000," ESSEC Working Papers DR 08001, ESSEC Research Center, ESSEC Business School.
    19. Tadateru Hayashi, 2019. "Industrialization of Developing Countries in a Multicountry, Multisector Capital Accumulation Model," Working Papers id:12960, eSocialSciences.
    20. Alejandro Cuñat & Marco Maffezzoli, "undated". "Trade Integration and Growth," Working Papers 220, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
    21. Petros Milionis, 2012. "Long-Run Development in the Open Economy," DEGIT Conference Papers c017_059, DEGIT, Dynamics, Economic Growth, and International Trade.

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    More about this item

    Keywords

    International trade; Heckscher-Ohlin; Economic growth; Convergence;
    All these keywords.

    JEL classification:

    • F1 - International Economics - - Trade
    • F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity

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