Demographics in Dynamic Heckscher-Ohlin Models: Overlapping Generations Versus Infinitely Lived Consumers

Claustre Bajona and Timothy J. Kehoe ()

No 12566, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper contrasts the properties of dynamic Heckscher-Ohlin models with overlapping generations with those of models with infinitely lived consumers. In both environments, if capital is mobile across countries, factor price equalization occurs after the initial period. In general, however, the properties of equilibria differ drastically across environments: With infinitely lived consumers, we find that factor prices equalize in any steady state or cycle and that, in general, there is positive trade in any steady state or cycle. With overlapping generations, in contrast, we construct examples with steady states and cycles in which factor prices are not equalized, and we find that any equilibrium that converges to a steady state or cycle with factor price equalization has no trade after a finite number of periods.

JEL-codes: F11 F43 O15 O41 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dge and nep-int
Date: 2006-10
Note: EFG ITI
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Working Paper: Demographics in dynamic Heckscher-Ohlin models: overlapping generations versus infinitely lived consumers (2006)
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