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Transitional dynamics, convergence and international capital flows in two-country models of innovation and growth

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  • Klaus Waelde

    (Tinbergen Institute)

Abstract

Global stability properties of dynamic two-country models can be easily studied in the case of international capital flows and simple capital market no-arbitrage conditions. With internationally constant relative productivities, long-run balanced growth path values for factor prices will hold on any equilibrium path unless one country experiences a period of no innovation. Innovation rates converge in the case of perfect international knowledge spillovers but long-run consumption levels and trade patterns are path dependent. The trade balance of the rich country is initially positive but after some time turns into a deficit.

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  • Klaus Waelde, 1994. "Transitional dynamics, convergence and international capital flows in two-country models of innovation and growth," International Trade 9403002, University Library of Munich, Germany, revised 03 Jan 1996.
    • Handle: RePEc:wpa:wuwpit:9403002
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    Cited by:

    1. 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.
    2. Klaus Waelde, 1994. "Trade pattern reversal: The role of technological change, factor accumulation and government intervention," International Trade 9403003, University Library of Munich, Germany, revised 06 Apr 1994.

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    JEL classification:

    • F1 - International Economics - - Trade
    • F2 - International Economics - - International Factor Movements and International Business

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