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Time Patience and Specialization Patterns in the Presence of Asset Trade

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  • YOSHIYASU ONO
  • AKIHISA SHIBATA

Abstract

Specialization patterns in an open‐economy two‐sector growth model with endogenous capital accumulation are examined in the presence of free international lending and borrowing. Without free international lending and borrowing it is known that, whereas the less (time‐)patient country decumulates real capital, the more patient country accumulates real capital and eventually specializes in a capital‐intensive industry. However, free trade of international financial assets causes a dramatic change in long‐run specialization patterns. In this case the less patient country may well specialize in the capital‐intensive industry and the more patient country in the labor‐intensive industry.

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  • Yoshiyasu Ono & Akihisa Shibata, 2010. "Time Patience and Specialization Patterns in the Presence of Asset Trade," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 42(1), pages 93-112, February.
    • Handle: RePEc:wly:jmoncb:v:42:y:2010:i:1:p:93-112
    DOI: 10.1111/j.1538-4616.2009.00279.x
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    1. Hu, Yunfang & Mino, Kazuo, 2013. "Trade structure and belief-driven fluctuations in a global economy," Journal of International Economics, Elsevier, vol. 90(2), pages 414-424.
    2. Kazumichi Iwasa & Kazuo Nishimura, 2023. "A Two Country Model of Trade with International Borrowing and Lending," Discussion Paper Series DP2023-08, Research Institute for Economics & Business Administration, Kobe University.
    3. Koichi Futagami & Akihiko Kaneko & Yoshiyasu Ono & Akihisa Shibata, 2008. "International Asset Trade, Capital Income Taxation, and Specialization Patterns," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 10(5), pages 743-763, October.
    4. Yunfang Hu & Kazuo Mino, 2011. "Globalization and Volatility under Alternative Trade Structures," KIER Working Papers 791, Kyoto University, Institute of Economic Research.
    5. Takumi Naito & Ryoji Ohdoi, 2011. "A two-country model of trade and growth with intersectoral knowledge spillovers," Journal of Economics, Springer, vol. 103(1), pages 39-58, May.

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