IDEAS home Printed from https://ideas.repec.org/a/spr/specre/v3y2001i1p71-80.html
   My bibliography  Save this article

The trade balance and the terms of trade in a two-country two-sector OLG economy

Author

Listed:
  • María Dolores Guilló

    (Universidad de Alicante, Campus San Vicente, Dpto. Fundamentos del Análisis Económico, 03071 Alicante, Spain)

Abstract

We consider a two-country, two-sector OLG model. It is shown that the trade balance and the relative price of exports are always positively related when exports are labor intensive regardless of the elasticity of intertemporal substitution in consumption. A large response of savings to future prices becomes a sufficient condition for an inverse relation between these variables only if exports are capital intensive. In this case, a rise in the terms of trade can be followed by a trade balance decline if consumption goods are capital intensive and the income effect implied on savings is negative and large.

Suggested Citation

  • María Dolores Guilló, 2001. "The trade balance and the terms of trade in a two-country two-sector OLG economy," Spanish Economic Review, Springer;Spanish Economic Association, vol. 3(1), pages 71-80.
    • Handle: RePEc:spr:specre:v:3:y:2001:i:1:p:71-80
    as

    Download full text from publisher

    File URL: http://link.springer.de/link/service/journals/10108/papers/1003001/10030071.pdf
    Download Restriction: Access to the full text of the articles in this series is restricted
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

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


    Cited by:

    1. Frédéric Gannon & Gilles Le Garrec & Vincent Touzé, 2016. "Aging, international capital flows and long run convergence," Working Papers hal-03475630, HAL.
    2. repec:hal:spmain:info:hdl:2441/5mcsclpvpm8lsadm6engnbebt7 is not listed on IDEAS
    3. Serdar Sayan, 2002. "Dynamic Heckscher-Ohlin Results from a 2x2x2x2 Overlapping Generations Model with Unequal Population Growth Rates," GE, Growth, Math methods 0203002, University Library of Munich, Germany, revised 14 Mar 2002.
    4. Gannon, Frédéric & Le Garrec, Gilles & Touzé, Vincent, 2020. "The South's demographic transition and international capital flows in a financially integrated world economy," Journal of Demographic Economics, Cambridge University Press, vol. 86(1), pages 1-45, March.
    5. repec:hal:spmain:info:hdl:2441/6dhper3pho8nspmsluhrt4lcd8 is not listed on IDEAS
    6. Sayan, Serdar, 2005. "Heckscher-Ohlin revisited: implications of differential population dynamics for trade within an overlapping generations framework," Journal of Economic Dynamics and Control, Elsevier, vol. 29(9), pages 1471-1493, September.

    More about this item

    Keywords

    Terms of trade; trade balance; two-sector OLG;
    All these keywords.

    JEL classification:

    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade
    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • F40 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - General

    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:spr:specre:v:3:y:2001:i:1:p:71-80. 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.

    We have no bibliographic references for this item. You can help adding them by using 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: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    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.