1. A Trade Algorithm for Multi-Region Models Subject to Spillover Externalities.
- Author
-
Leimbach, Marian and Eisenack, Klaus
- Subjects
EXTERNALITIES ,ALGORITHMS ,ECONOMIC equilibrium ,STATICS & dynamics (Social sciences) ,TECHNOLOGICAL innovations ,ECONOMICS - Abstract
In this paper we present an algorithm that deals with trade interactions within a multi-region model. In contrast to traditional approaches this algorithm is able to handle spillover externalities. We focus on technological spillovers which are due to capital trade. The algorithm of finding a pareto-optimal solution in an intertemporal framework is embedded in a decomposed optimization process. The paper analyzes convergence and equilibrium properties of this algorithm. In the final part of the paper, we apply the algorithm to investigate possible impacts of technological spillovers. While benefits of technological spillovers are significant for the capital-importing region, benefits for the capital-exporting region depend on the type of regional disparities and the resulting specialization and terms-of-trade effects. [ABSTRACT FROM AUTHOR]
- Published
- 2009
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