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  • Serdar Sayan
  • Mehdi Jelassi


We study the time paths of different variables on the way to the analytically obtained long-run autarky equilibrium for a 2-sector, 2-factor overlapping generations economy under different initial conditions and parameter confıgurations, and investigate implications of the initial conditions for convergence and growth. We then proceed to study the sensitivity of dynamic equilibrium to changes in the population growth rate and explore how differences in demographic characteristics across countries may create the basis for long-run comparative advantages opening the way for free trade between two countries that are identical except for population growth rates in much the same way as done in the Heckscher-Ohlin (HO) model. Our results establish that population growth rate differences will serve as determinants of HO-type comparative advantages but free trade will not necessarily imply welfare gains for both parties unlike what the static HO model would predict. The explanation we offer for this nicely complements previously suggested reasons in the dynamic trade literature to explain why trade may not improve welfare for both parties in a dynamic OLG set-up with stationary populations.

Suggested Citation

  • Serdar Sayan & Mehdi Jelassi, 2005. "LESSONS ABOUT GROWTH, CONVERGENCE AND TRADE FROM ANALYTICAL AND NUMERICAL SOLUTIONS OF A 2x2 OVERLAPPING GENERATIONS MODEL FOR A GROWING-POPULATION ECONOMY," Computing in Economics and Finance 2005 286, Society for Computational Economics.
  • Handle: RePEc:sce:scecf5:286

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    More about this item


    Overlapping generations; General equilibrium; Growth; Convergence; Trade; Population growth;

    JEL classification:

    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • J10 - Labor and Demographic Economics - - Demographic Economics - - - General


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