Trade and Indeterminacy in a Dynamic General Equilibrium Model
This paper introduces sector-specific externalities in the Heckscher-Ohlin two-country dynamic general equilibrium model to show that indeterminacy of the equilibrium path in the would market can occur. Under certain conditions in terms of factor intensities, there are multiple equilibrium paths from the same initial distribution of capital in the world market, and the distribution of capital in the limit differs among equilibrium paths.
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- Jess Benhabib & Qinglai Meng & Kazuo Nishimura, 2000.
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- Nishimura, Kazuo & Yano, Makoto, 1993. "Interlinkage in the Endogenous Real Business Cycles of International Economies," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 3(1), pages 151-168, January.
- Truman Bewley, 2010. "An Integration of Equilibrium Theory and Turnpike Theory," Levine's Working Paper Archive 1381, David K. Levine.
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