A two-country dynamic Heckscher-Ohlin model with physical and human capital accumulation

Yunfang Hu, Murray C. Kemp, Koji Shimomura

    Research output: Contribution to journalArticlepeer-review

    5 Citations (Scopus)

    Abstract

    We study a two-country endogenous growth model in which the long-run growth is propelled by the accumulation of physical and human capital. We show that in the integrated world economy, there exists a unique and locally saddlepoint stable balanced growth equilibrium. We also show that the incorporation of adjustment costs in the process of human capital accumulation leads to a lower long-run growth rate. We then show that, in the 2-country world economy with international trade, balanced growth is possible. Finally, we present a dynamic Heckscher-Ohlin theorem concerning the pattern of international trade.

    Original languageEnglish
    Pages (from-to)67-84
    Number of pages18
    JournalEconomic Theory
    Volume41
    Issue number1
    DOIs
    Publication statusPublished - 2009 Jan 1

    Keywords

    • Endogenous growth
    • Human capital formation
    • Trade pattern

    ASJC Scopus subject areas

    • Economics and Econometrics

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