Dynamic Factor Price Equalization & International Income Convergence
The paper develops a tractable way to incorporate the micro structure of dual models of international trade into a standard class of dynamic open-economy macro models. In the process, it develops the concept of a dynamic factor price equalization set and an integrated intertemporal equilibrium. A number of results are obtained concerning trade, growth, and income convergence. Countries with higher capital/labor ratios may stay wealthier over time, both in the transition and in the new steady state. Real shocks in one country will be transmitted to the other country through the factor markets and traded goods prices.
|Date of creation:||01 Dec 2008|
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2010 Meeting Papers
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"National Product Functions In Comparative Steady-State Analysis,"
University of Western Ontario, The Centre for the Study of International Economic Relations Working Papers
8808c, University of Western Ontario, The Centre for the Study of International Economic Relations.
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