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Catching-up and Regulation in a Two-Sector Small Open Economy

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  • van de Klundert, T.C.M.J.

    (Tilburg University, Center For Economic Research)

  • Smulders, J.A.

    (Tilburg University, Center For Economic Research)

Abstract

Deregulation is often aimed at reducing mark-up pricing in technologically stagnant sheltered sectors. The paper shows that this may decrease the process of catching-up and welfare since it shifts resources away from R&D-intensive tradables sectors. Catching-up and deregulation are analyzed in an R&D-based growth model that allows for international capital mobility, trade, and spillovers. Knowledge spillovers raise the productivity of R&D in the exposed sector which results in catching-up. In the long run, the economy grows at the exogenous world growth rate. Capital mobility speeds up convergence. Temporary shocks have long-lasting effects as the economy exhibits hysteresis. Copyright 1999 by Blackwell Publishing Ltd.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • van de Klundert, T.C.M.J. & Smulders, J.A., 1997. "Catching-up and Regulation in a Two-Sector Small Open Economy," Discussion Paper 1997-51, Tilburg University, Center for Economic Research.
    • Handle: RePEc:tiu:tiucen:dcb72bbc-f57c-4bb3-8842-6b3ff8b8790e
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    1. Jerbashian, Vahagn, 2021. "Intellectual Property And Product Market Competition Regulations In A Model With Two R&D Performing Sectors," Macroeconomic Dynamics, Cambridge University Press, vol. 25(1), pages 59-80, January.
    2. repec:bla:germec:v:7:y:2006:i::p:135-161 is not listed on IDEAS

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