Convergence in a dynamic Heckscher–Ohlin model with land

Guilló, María Dolores; Pérez-Sebastián, Fidel

Abstract

Convergence among nations that share the same preferences and technologies is a key result of the closed-economy neoclassical growth framework that has received substantial support in the data. However, Heckscher–Ohlin versions of the two-sector neoclassical growth model predict that nations that differ in their capital–labor ratios may not converge to the same steady state, even if they are identical in all other aspects. This is a puzzling result that warns us about potential dangers of international trade. In this paper we show that when land, an input in fixed supply, is introduced into the model, international trade in goods no longer limits the capacity of poor nations to catch up with the advanced world.

Citation

Guilló, M. D., & Pérez-Sebastián, F. (2015). Convergence in a dynamic Heckscher–Ohlin model with land. Review of development economics, 19(3), 725-734. https://doi.org/10.1111/rode.12158

• Journal Article Type: Article
• Acceptance Date: Jan 20, 2015
• Online Publication Date: Jul 15, 2015
• Publication Date: 2015-08
• Deposit Date: Feb 3, 2016
• Publicly Available Date: Nov 23, 2017
• Journal: Review of development economics
• Print ISSN: 1363-6669
• Publisher: Wiley
• Peer Reviewed: Peer Reviewed
• Volume: 19
• Issue: 3
• Pages: 725-734
• DOI: https://doi.org/10.1111/rode.12158
• Keywords: Convergence, Heckscher–Ohlin model
• Public URL: https://hull-repository.worktribe.com/output/384742
• Publisher URL: http://onlinelibrary.wiley.com/doi/10.1111/rode.12158/abstract
• Additional Information: Authors' accepted manuscript of article: Guillo, M. D. and Perez-Sebastian, F. (2015), Convergence in a Dynamic Heckscher–Ohlin Model with Land. Review of Development Economics, 19: 725–734. doi:10.1111/rode.12158
• Contract Date: Nov 23, 2017