Title
A Two-Country Dynamic General Equilibrium Model of Endogenous Growth and International Trade
Abstract
We formulate a two(-country) by two(-tradable good) by two(-factor)
dynamic general equilibrium model of endogenous growth and international
rade that has no market distortion. After deriving the conditions
for a balanced growth path with incomplete specialization in both
countries to exist and to be locally saddlepoint stable, we show
that along the balanced growth paths (i) a dynamic version of
the Heckscher-Ohlin Theorem is established, (ii) the relationship
between the volume of international trade and the long-run growth
rate depends on the factor-intensity ranking between the two sector,
and (iii) so does whether the Law of Comparative Advantage holds
or not. The Stolper-Samuelson Theorem and the Factor Price Equalization
Theorem are shown to hold in a dynamic framework.
Junko DOI
Graduate School of Economics, Kobe University
Koji SHIMOMURA
Research Institute for Economics and Business Administration
Kobe University
Rokkodai-cho, Nada-ku, Kobe
657-8501 Japan
Phone: (81) 78 803 7036
Fax: (81) 78 803 7059