Dynamic Heckscher-Ohlin Results from a 2x2x2x2 Overlapping Generations Model with Unequal Population Growth Rates
This paper considers a two-country world where the population in one country grows faster than the other, and investigates the implications of the addition of non-stationary population dynamics to a simple 2- commodity, 2-factor model of international trade within an overlapping- generations framework. The two countries in the world considered are assumed to be identical in every respect except, for their population growth rates initially. The effects of differential speed of population growth on relative factor endowments and patterns of international trade are explored by comparing simulation results obtained from the overlapping-generations general equilibrium model under autarky and trade scenarios. Unequal population growth rates are shown to give rise to differentials in wage rates and rentals for capital under autarky conditions. This, in turn, causes costs of production and relative prices to differ, creating the grounds for trade in the sense of Heckscher-Ohlin (HO). Yet, the results from simulation exercises indicate that static welfare results from the standard 2x2x2 HO model can not be generalized to hold in a dynamic setting with overlapping generations of individuals.
|Date of creation:||14 Mar 2002|
|Date of revision:||14 Mar 2002|
|Note:||Type of Document - Acrobat PDF; prepared on IBM PC; to print on HP Laser Jet; pages: 37 ; figures: Included. Department of Economics Discussion Paper No. 02-01, Bilkent University, January 2002.|
|Contact details of provider:|| Web page: http://econwpa.repec.org|
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Jonathan Eaton, 1984.
"A Dynamic Specific-Factors Model of International Trade,"
NBER Working Papers
1479, National Bureau of Economic Research, Inc.
- Jonathan Eaton, 1987. "A Dynamic Specific-Factors Model of International Trade," Review of Economic Studies, Oxford University Press, vol. 54(2), pages 325-338.
- Serdar Sayan & Ali Emre Uyar, 2002.
"Directions of Trade Flows and Labor Movements between High- And Low-Population Growth Countries: An Overlapping Generations General Equilibrium Analysis,"
GE, Growth, Math methods
- Serdar Sayan & Ali Emre Uyar, 2001. "Directions of Trade Flows and Labor Movements between high-and Low-Population Growth Countries: An Overlapping Generations General Equilibrium Analysis," Working Papers 0108, Department of Economics, Bilkent University.
- Findlay, Ronald, 1970. "Factor Proportions and Comparative Advantage in the Long Run," Journal of Political Economy, University of Chicago Press, vol. 78(1), pages 27-34, Jan.-Feb..
- Mountford, Andrew, 1998. "Trade, convergence and overtaking," Journal of International Economics, Elsevier, vol. 46(1), pages 167-182, October.
- Raffelhuschen, Bernd & Risa, Alf Erling, 1995. "Reforming social security in a small open economy," European Journal of Political Economy, Elsevier, vol. 11(3), pages 469-485, September.
- Galor, Oded, 1992. "A Two-Sector Overlapping-Generations Model: A Global Characterization of the Dynamical System," Econometrica, Econometric Society, vol. 60(6), pages 1351-86, November.
- Alan J. Auerbach & Laurence J. Kotlikoff & Robert Hagemann & Giuseppe Nicoletti, 1989. "The Dynamics of an Aging Population: The Case of Four OECD Countries," NBER Working Papers 2797, National Bureau of Economic Research, Inc.
- Galor, Oded, 1986. "Time preference and international labor migration," Journal of Economic Theory, Elsevier, vol. 38(1), pages 1-20, February.
- Willem H. Buiter, 1979.
"Time Preference and International Lending and Borrowing in an Overlapping-Generations Model,"
NBER Working Papers
0352, National Bureau of Economic Research, Inc.
- Buiter, Willem H, 1981. "Time Preference and International Lending and Borrowing in an Overlapping-Generations Model," Journal of Political Economy, University of Chicago Press, vol. 89(4), pages 769-97, August.
- Miles, David K, 1997.
"Modelling the Impact of Demographic Change Upon the Economy,"
CEPR Discussion Papers
1762, C.E.P.R. Discussion Papers.
- Miles, David, 1999. "Modelling the Impact of Demographic Change upon the Economy," Economic Journal, Royal Economic Society, vol. 109(452), pages 1-36, January.
- Galor, Oded & Lin, Shoukang, 1994. "Terms of Trade and Current Account Dynamics: A Methodological Critique," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 35(4), pages 1001-14, November.
- Serdar Sayan, 2001. "Patterns of Trade between Countries with Differing Age Compositions of Populations: An Overlapping Generations General Equilibrium Analysis," Computing in Economics and Finance 2001 252, Society for Computational Economics.
- Ayse Imrohoroglu & Selahattin Imrohoroglu & Douglas H. Joines, 1998. "Computing Models of Social Security," QM&RBC Codes 131, Quantitative Macroeconomics & Real Business Cycles.
- Kjetil Storesletten, .
"Sustaining Fiscal Policy Through Immigration,"
_005, Stockholm University, Institute for International Economic Studies.
- Zhiqi Chen, 1992. "Long-Run Equilibria in a Dynamic Heckscher-Ohlin Model," Canadian Journal of Economics, Canadian Economics Association, vol. 25(4), pages 923-43, November.
- Deardorff, Alan V., 1979. "Weak links in the chain of comparative advantage," Journal of International Economics, Elsevier, vol. 9(2), pages 197-209, May.
- María Dolores Guilló, 2001. "The trade balance and the terms of trade in a two-country two-sector OLG economy," Spanish Economic Review, Springer;Spanish Economic Association, vol. 3(1), pages 71-80.
- H. Oniki & H. Uzawa, 1965. "Patterns of Trade and Investment in a Dynamic Model of International Trade," Review of Economic Studies, Oxford University Press, vol. 32(1), pages 15-37.
- Guillo, Maria Dolores, 1999. "On Terms of Trade and Capital Accumulation," Review of International Economics, Wiley Blackwell, vol. 7(2), pages 228-44, May.
- Kenc, Turalay & Sayan, Serdar, 2001. "Demographic shock transmission from large to small countries: An overlapping generations CGE analysis," Journal of Policy Modeling, Elsevier, vol. 23(6), pages 677-702, August.
- Alan J. Auerbach & Laurence J. Kotlikoff & Robert P. Hagemann & Giuseppe Nicoletti, 1989. "The Economic Dynamics of an Ageing Population: The Case of Four OECD Countries," OECD Economics Department Working Papers 62, OECD Publishing.
When requesting a correction, please mention this item's handle: RePEc:wpa:wuwpge:0203002. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (EconWPA)
If references are entirely missing, you can add them using this form.