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The International Economics of Transitional Growth -- The Case of the United States

Laurence J. Kotlikoff; Edward E. Leamer; Jeffrey D. Sachs

Title:
The International Economics of Transitional Growth -- The Case of the United States
Author(s):
Kotlikoff, Laurence J.
Leamer, Edward E.
Sachs, Jeffrey D.
Date:
Type:
Reports
Department(s):
Earth Institute
Persistent URL:
Series:
NBER Working Paper
Part Number:
773
Geographic Area:
United States
Publisher:
National Bureau of Economic Research
Publisher Location:
Cambridge, Mass.
Abstract:
This paper develops a general equilibrium two country, two commodity dynamic simulation model of international trade in commodities and financial claims. The model generalizes the Heckscher-Ohlin static theory of trade by incorporating costs of quickly adjusting levels of capital stocks in particular industries; i.e., capital mobility in the short run is permitted, but at a price. The model predicts Heckscher-Ohlin relationships, including factor price equalization, in the long run, but not during the economy's transition path to its ultimate steady-state. An interesting feature of the model is that it provides a determinate solution to the long-run international allocation of the world's capital stock. This is true despite the fact that the Rybchinski theorem holds in the long run. The simulation model of international trade with costly capital stock adjustment appears capable of explaining many features of the patterns of factor price equalization, international investment, and changes in comparative advantage that have characterized the post-war period.
Subject(s):
Managerial economics
Economics
International economic relations
Item views
269
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Suggested Citation:
Laurence J. Kotlikoff, Edward E. Leamer, Jeffrey D. Sachs, , The International Economics of Transitional Growth -- The Case of the United States, Columbia University Academic Commons, .

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