Dynamic Factor Price Equalization & International Income Convergence

Author/Editor:

Clinton R. Shiells ; Joseph F. Francois

Publication Date:

December 1, 2008

Electronic Access:

Free Full Text (PDF file size is 517 KB).Use the free Adobe Acrobat Reader to view this PDF file

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

The paper develops a tractable way to incorporate the micro structure of dual models of international trade into a standard class of dynamic open-economy macro models. In the process, it develops the concept of a dynamic factor price equalization set and an integrated intertemporal equilibrium. A number of results are obtained concerning trade, growth, and income convergence. Countries with higher capital/labor ratios may stay wealthier over time, both in the transition and in the new steady state. Real shocks in one country will be transmitted to the other country through the factor markets and traded goods prices.

Series:

Working Paper No. 08/267

Subject:

English

Publication Date:

December 1, 2008

ISBN/ISSN:

9781451871258/1018-5941

Stock No:

WPIEA2008267

Price:

$18.00 (Academic Rate:$18.00)

Format:

Paper

Pages:

17

Please address any questions about this title to publications@imf.org