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Endogenous Growth in a Dependent Economy with Traded and Nontraded Capital

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  • Turnovsky, Stephen J

Abstract

The equilibrium growth path for this economy depends upon the relative sectoral capital intensities of the two production functions. If the nontraded sector is relatively intensive in traded capital, both the relative price of nontraded output and the price of installed capital always remain at their respective steady-state levels. Traded capital and aggregate wealth are always on their respective steady-state growth paths. Nontraded capital undergoes transitional dynamics, ultimately converging to the growth rate of the traded capital and an equilibrium ratio of traded to nontraded capital. If the sectoral intensities are reversed, both asset prices will follow transitional adjustment paths. Copyright 1996 by Blackwell Publishing Ltd.

Suggested Citation

  • Turnovsky, Stephen J, 1996. "Endogenous Growth in a Dependent Economy with Traded and Nontraded Capital," Review of International Economics, Wiley Blackwell, vol. 4(3), pages 300-321, October.
    • Handle: RePEc:bla:reviec:v:4:y:1996:i:3:p:300-321
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    Cited by:

    1. Nikos Christodoulakis, 2009. "Ten Years Of Emu: Convergence, Divergence And New Policy Priorities," National Institute Economic Review, National Institute of Economic and Social Research, vol. 208(1), pages 86-100, April.
    2. Stephen J. Turnovsky, 2000. "Growth in an open economy: some recent developments," Working Paper Research 05, National Bank of Belgium.
    3. Brock, Philip L., 2011. "The Penn-Balassa-Samuelson effect through the lens of the dependent economy model," Journal of Economic Dynamics and Control, Elsevier, vol. 35(9), pages 1547-1556, September.
    4. Carlos Esteban Posada, 1997. "Otro Costo De Una Inflación Perfectamente Prevista," Revista ESPE - Ensayos Sobre Política Económica, Banco de la República, vol. 16(31), pages 5-33, June.
    5. Shaw, Ming-Fu & Lai, Ching-Chong & Chang, Wen-Ya, 2005. "Anticipated policy and endogenous growth in a small open monetary economy," Journal of International Money and Finance, Elsevier, vol. 24(5), pages 719-743, September.
    6. Nicos Christodoulakis & Vassilis Sarantides, 2017. "External Asymmetries in the Euro Area and the Role of Foreign Direct Investment," The World Economy, Wiley Blackwell, vol. 40(2), pages 393-423, February.
    7. Chung Yi Tse & Charles Ka Yui Leung, 2002. "Increasing Wealth and Increasing Instability: The Role of Collateral," Review of International Economics, Wiley Blackwell, vol. 10(1), pages 45-52, February.
    8. Rahmati, Mohammad H. & Karimirad, Ali, 2017. "Subsidy and natural resource curse: Evidence from plant level observations in Iran," Resources Policy, Elsevier, vol. 52(C), pages 90-99.
    9. Enrique R. Casares, 2015. "A relationship between external public debt and economic growth," Estudios Económicos, El Colegio de México, Centro de Estudios Económicos, vol. 30(2), pages 219-243.
    10. Frederick van der Ploeg, 2011. "Natural Resources: Curse or Blessing?," Journal of Economic Literature, American Economic Association, vol. 49(2), pages 366-420, June.
    11. Torvik, Ragnar, 2001. "Learning by doing and the Dutch disease," European Economic Review, Elsevier, vol. 45(2), pages 285-306, February.
    12. Meng, Qinglai, 2003. "Multiple transitional growth paths in endogenously growing open economies," Journal of Economic Theory, Elsevier, vol. 108(2), pages 365-376, February.

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