This paper considers a two-country world where the population in one country grows faster than the other, and investigates the implications of the addition of non-stationary population dynamics to a simple 2- commodity, 2-factor model of international trade within an overlapping- generations framework. The two countries in the world considered are assumed to be identical in every respect except, for their population growth rates initially. The effects of differential speed of population growth on relative factor endowments and patterns of international trade are explored by comparing simulation results obtained from the overlapping-generations general equilibrium model under autarky and trade scenarios. Unequal population growth rates are shown to give rise to differentials in wage rates and rentals for capital under autarky conditions. This, in turn, causes costs of production and relative prices to differ, creating the grounds for trade in the sense of Heckscher-Ohlin (HO). Yet, the results from simulation exercises indicate that static welfare results from the standard 2x2x2 HO model can not be generalized to hold in a dynamic setting with overlapping generations of individuals.
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Length: 37 pages Date of creation: 14 Mar 2002 Date of revision:
14 Mar 2002 Handle: RePEc:wpa:wuwpge:0203002
Note: Type of Document - Acrobat PDF; prepared on IBM PC; to print on HP Laser Jet; pages: 37 ; figures: Included. Department of Economics Discussion Paper No. 02-01, Bilkent University, January 2002. Contact details of provider: Web page: http://129.3.20.41
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Find related papers by JEL classification: F11 - International Economics - - Trade - - - Neoclassical Models of Trade F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models D91 - Microeconomics - - Intertemporal Choice and Growth - - - Intertemporal Consumer Choice; Life Cycle Models and Saving J10 - Labor and Demographic Economics - - Demographic Economics - - - General
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References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
Ayse Imrohoroglu & Selahattin Imrohoroglu & Douglas H. Joines, 1998.
"Computing Models of Social Security,"
QM&RBC Codes
131, Quantitative Macroeconomics & Real Business Cycles.
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