Neoclassical Growth and Commodity Trade

Marco Maffezzoli () and Cuñat, Alejandro
Authors registered in the RePEc Author Service: Alejandro Cunat

No 3322, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We construct and numerically solve a dynamic Heckscher-Ohlin model in which the initial distribution of production factors in the world makes worldwide factor price equalization impossible, and leads countries to group in two diversification cones. We study the dynamics of income per capita and factor prices. Our results suggest that the Ramsey model under complete specialization overcomes several shortcomings of its autarky and factor price equalization counterparts. In comparison with the autarky model, for example, it can produce similar transitional dynamics and account for important cross-sectional differences in the levels and growth rates of income per capita while generating much smaller rental-rate differentials across countries. Moreover, it does not necessarily yield convergence in levels for identically parameterized economies. All in all, the Ramsey/Complete Specialization model seems to provide a better benchmark from which to depart when studying the dynamic behaviour of countries and cross-sectional differences in income per capita levels and growth rates.

Keywords: International trade; Heckscher-ohlin; Economic growth; Convergence; Simulation (search for similar items in EconPapers)
JEL-codes: F10 F40 O40 (search for similar items in EconPapers)
Date: 2002-04
New Economics Papers: this item is included in nep-dev and nep-dge
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Journal Article: Neoclassical Growth and Commodity Trade (2004)
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