Accumulation and Growth in a Two-Country Model: A Simulation

Lipton, David; Sachs, Jeffrey D.

This paper analyzes saving and capital accumulation in a two-good growth model of two market economies in which economic agents optimize with perfect foresight. The goal is to present a model in which short-run dynamics and the steady-state are soundly integrated. We stress the importance of asset markets as the linkage that transmits disturbances both internationally and intertemporally. While many components of the model described below can be found in the literature on optimal consumption, investment and international growth models, we provide a consistent synthesis. Our framework permits the analysis of structural adjustment in the global economy, and the dynamic effects of a wide range of public policies.


More About This Work

Academic Units
Earth Institute
National Bureau of Economic Research
NBER Working Paper, 572
Published Here
September 28, 2009


Published in Journal of International Economics, vol. 15, no. 1-2 (August 1983), pp. 135-159.