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Trade Patterns and Perpetual Youth in a Dynamic Small Open Economy

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Please use this identifier to cite or link to this item:http://hdl.handle.net/2115/47726

Title: Trade Patterns and Perpetual Youth in a Dynamic Small Open Economy
Authors: Kanamori, Naoshige1 Browse this author
Authors(alt): 金盛, 直茂1
Keywords: Two-Sector Growth Model
Small Open Economy
Perpetual Youth Model
Issue Date: 30-Nov-2011
Publisher: Graduate School of Economics and Business Administration, Hokkaido University
Journal Title: Economic Journal of Hokkaido University
Volume: 40
Start Page: 29
End Page: 40
Abstract: In this paper, I examine the long-run specialization patterns that arise in a small open economy using a two-sector growth model in which households faced with finite but uncertain lifetimes undertake intertemporal optimization decisions. I show that in a small open economy with a positive birth rate, imperfect specialization requires that the subjective discount rate be less than the interest rate. This finding contrasts sharply with Stiglitz's (1970) finding that a country must be completely specialized if the subjective discount rate differs from the interest rate. In addition, I show that a steady state equilibrium with incomplete specialization can be saddle-point stable.
Type: bulletin (article)
URI: http://hdl.handle.net/2115/47726
Appears in Collections:Economic Journal of Hokkaido University > Vol.40

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