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An analysis of stability of the north-south growth model of trade: Saddle-path stability of the generalized grossman-helpman model with skilled and unskilled labours

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  • Takanori Shimizu
  • Hisayuki Okamoto

Abstract

This paper analyses the local stability of the steady state of the generalized Lai (1995) model, i.e. the Shimizu and Okamoto (2004) model. Lai is a modified version of Grossman and Helpman (1991a, 1991b: Ch. 11) by assuming that there are two types of labour: skilled and unskilled labours. Shimizu and Okamoto (2004) generalize the Lai model by assuming that Southern knowledge stock depends not only on Southern cumulative experience but also on the number of products the North manufactures. This paper shows that the stability of steady state in the generalized Lai model has the saddle point property. Thus, this paper also establishes the stability of the Grossman and Helpman (1991a, 1991b: Ch. 11) model.

Suggested Citation

  • Takanori Shimizu & Hisayuki Okamoto, 2005. "An analysis of stability of the north-south growth model of trade: Saddle-path stability of the generalized grossman-helpman model with skilled and unskilled labours," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 14(3), pages 299-317.
    • Handle: RePEc:taf:jitecd:v:14:y:2005:i:3:p:299-317
    DOI: 10.1080/09638190500204334
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    References listed on IDEAS

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    1. Grossman, Gene M & Helpman, Elhanan, 1991. "Endogenous Product Cycles," Economic Journal, Royal Economic Society, vol. 101(408), pages 1214-1229, September.
    2. Lai, Edwin L. C., 1995. "The product cycle and the world distribution of income A reformulation," Journal of International Economics, Elsevier, vol. 39(3-4), pages 369-382, November.
    3. Arnold, Lutz G., 2002. "On the growth effects of North-South trade: the role of labor market flexibility," Journal of International Economics, Elsevier, vol. 58(2), pages 451-466, December.
    4. Currie, David, et al, 1999. "Phases of Imitation and Innovation in a North-South Endogenous Growth Model," Oxford Economic Papers, Oxford University Press, vol. 51(1), pages 60-88, January.
    5. Grossman, Gene M & Helpman, Elhanan, 1991. "Endogenous Product Cycles," Economic Journal, Royal Economic Society, vol. 101(408), pages 1214-1229, September.
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    Cited by:

    1. Takanori Shimizu & Yoshifumi Okawa & Hisayuki Okamoto, 2008. "An Analysis of Income Distribution between the North and the South: the Grossman–Helpman and Lai Results Re‐examined," Review of International Economics, Wiley Blackwell, vol. 16(1), pages 159-172, February.

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