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Neoclassical Growth in an Interdependent World

Author

Listed:
  • Benny Kleinman
  • Ernest Liu
  • Stephen J. Redding
  • Motohiro Yogo

Abstract

We develop a tractable, multi-country, open-economy model of neoclassical growth. We use this quantitative framework to study the determinants of growth and convergence (as a central issue in macroeconomics) and the welfare effects of international integration or disintegration (as a central issue in international economics). Trade and capital market frictions interact to determine steady-state outcomes, growth along the transition path, and welfare. Capital accumulation is a key margin through which both frictions affect welfare. Speeds of convergence for assets and capital differ and are jointly determined. Unexpected shocks have valuation effects that depend on bilateral gross capital positions.

Suggested Citation

  • Benny Kleinman & Ernest Liu & Stephen J. Redding & Motohiro Yogo, 2023. "Neoclassical Growth in an Interdependent World," NBER Working Papers 31951, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:31951
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    Cited by:

    1. Karakoç, Bahadır, 2025. "Credit where it's due: The synergy of trade credit and innovation in R&D-driven firms," International Journal of Production Economics, Elsevier, vol. 283(C).
    2. Christopher Clayton & Matteo Maggiori & Jesse Schreger, 2025. "Putting Economics Back into Geoeconomics," NBER Chapters, in: NBER Macroeconomics Annual 2025, volume 40, National Bureau of Economic Research, Inc.
    3. Carlos G'oes, 2024. "Trade, Growth, and Product Innovation," Papers 2406.08727, arXiv.org.
    4. Tsvetelina Nenova, 2025. "Global or Regional Safe Assets: Evidence from Bond Substitution Patterns," BIS Working Papers 1254, Bank for International Settlements.

    More about this item

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F60 - International Economics - - Economic Impacts of Globalization - - - General

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