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Terms-Of-Trade And The Current Account: A Two-Country/Two-Sector Growth Model

Author

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  • María Dolores Guilló

    () (Universidad de Alicante)

Abstract

This paper examines the equilibrium relation, within the non-specialized area, between the current account and the terms-of-trade in a two-country/sector growth model. Along a convergent eqirilibrium path, this relation can have any sign depending on the trading sectors' relative factor intensities and on the steady state relative price slopes of demand for and supply of investment goods. It is also shown that a negative association between capital accumulation and the terms-of-trade for the exporter of capital intensive goods does not require an import sector growing faster than the export sector.

Suggested Citation

  • María Dolores Guilló, 1995. "Terms-Of-Trade And The Current Account: A Two-Country/Two-Sector Growth Model," Working Papers. Serie AD 1995-03, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
  • Handle: RePEc:ivi:wpasad:1995-03
    as

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    File URL: http://www.ivie.es/downloads/docs/wpasad/wpasad-1995-03.pdf
    File Function: Fisrt version / Primera version, 1995
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    References listed on IDEAS

    as
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