IDEAS home Printed from https://ideas.repec.org/a/gok/ijdcv1/v1y2011i3p339-354.html
   My bibliography  Save this article

The effects of home bias in a model of endogenous growth

Author

Listed:
  • Bond, Eric W
  • Iwasa, Kazumichi
  • Nishimura, Kazuo

Abstract

We examine the effects of home bias in preferences in a two country model of endogenous growth without markets for international lending and borrowing. We show that the presence of a consumer preference for domestic goods can result in a multiplicity of prices consistent with trade balance when the elasticity of substitution between goods is sufficiently low. However, the uniqueness condition is always satisfied when home bias is due to transport costs. We derive conditions for existence, uniqueness, and saddle path stability of the balanced growth path. We also examine the effect of home bias on the terms of trade and the speed of convergence to the balanced growth path.

Suggested Citation

  • Bond, Eric W & Iwasa, Kazumichi & Nishimura, Kazuo, 2011. "The effects of home bias in a model of endogenous growth," International Journal of Development and Conflict, Gokhale Institute of Politics and Economics, vol. 1(3), pages 339-354.
    • Handle: RePEc:gok:ijdcv1:v:1:y:2011:i:3:p:339-354
    as

    Download full text from publisher

    File URL: http://www.worldscientific.com/doi/pdf/10.1142/S201026901100021X
    Download Restriction: no
    ---><---

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gok:ijdcv1:v:1:y:2011:i:3:p:339-354. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://edirc.repec.org/data/gipepin.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.