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International Impact of Productivity Shocks with Endogenous Labor Supply: The Two Large Economy Case


  • Kocyigit, Ali

    () (Florida International University)


The study constructs a deterministic, overlapping-generations, two-economy model. The analysis is conducted in the context of an infinitely-lived economy where individuals have finite (two-periods) lifetimes. The model shows that a positive productivity shock produces positive correlation between savings and investment despite the fact that there is perfect international capital mobility. F u rt h e r, the simulation results show that the endogeneity of the labor supply gives rise to cyclical adjustment of the economy towards its steady state.

Suggested Citation

  • Kocyigit, Ali, 1998. "International Impact of Productivity Shocks with Endogenous Labor Supply: The Two Large Economy Case," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 13, pages 464-484.
  • Handle: RePEc:ris:integr:0082

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    More about this item


    International Impact; Productivity Shocks;

    JEL classification:

    • F40 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - General


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