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Uncertain lifetimes and convergence in a two-country Heckscher–Ohlin model.
- Source :
-
Mathematical Social Sciences . Nov2015, Vol. 78, p14-20. 7p. - Publication Year :
- 2015
-
Abstract
- In a two-country infinite-horizon model, with two traded goods and two factors of production and no international borrowing and lending, there is no convergence of incomes if there is factor-price equalization. With factor-price equalization, the Euler equations of the two economies become identical. I show that in such a set-up if agents have a non-zero probability of death, then we do get convergence. In the steady state the two economies have identical capital–labor ratios and revert to autarky. [ABSTRACT FROM AUTHOR]
Details
- Language :
- English
- ISSN :
- 01654896
- Volume :
- 78
- Database :
- Academic Search Index
- Journal :
- Mathematical Social Sciences
- Publication Type :
- Academic Journal
- Accession number :
- 111293108
- Full Text :
- https://doi.org/10.1016/j.mathsocsci.2015.08.002