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Catching-up and regulation in a two-sector small open economy

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  • van de Klundert, T.C.M.J.

    (Tilburg University, School of Economics and Management)

  • Smulders, J.A.

    (Tilburg University, School of Economics and Management)

Abstract

Deregulation is often aimed at reducing mark-up pricing in technologically stagnant sheltered sectors. The paper shows that this may decrease the process of catching-up and welfare since it shifts resources away from R&D-intensive tradables sectors. Catching-up and deregulation are analyzed in an R&D-based growth model that allows for international capital mobility, trade, and spillovers. Knowledge spillovers raise the productivity of R&D in the exposed sector which results in catching-up. In the long run, the economy grows at the exogenous world growth rate. Capital mobility speeds up convergence. Temporary shocks have long-lasting effects as the economy exhibits hysteresis. Copyright 1999 by Blackwell Publishing Ltd.
(This abstract was borrowed from another version of this item.)
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • van de Klundert, T.C.M.J. & Smulders, J.A., 1999. "Catching-up and regulation in a two-sector small open economy," Other publications TiSEM 3cd1fec7-de66-4d32-a42a-6, Tilburg University, School of Economics and Management.
    • Handle: RePEc:tiu:tiutis:3cd1fec7-de66-4d32-a42a-6f77b48456a7
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    1. Jerbashian, Vahagn, 2021. "Intellectual Property And Product Market Competition Regulations In A Model With Two R&D Performing Sectors," Macroeconomic Dynamics, Cambridge University Press, vol. 25(1), pages 59-80, January.
    2. Stefan F. Schubert & Stephen J. Turnovsky, 2006. "Anticipated Fiscal Policy Changes and Goods Market Adjustments," German Economic Review, Verein für Socialpolitik, vol. 7(2), pages 135-161, May.

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