Autarkic Indeterminacy and Trade Determinacy

Nicholas C.S. Sim and Kong-Weng Ho ()

Departmental Working Papers from National University of Singapore, Department of Economics

Abstract: Most existing evidences for indeterminacy are obtained from analyzing models that do not consider trade. This paper considers an extension of Nishimura and Shimomura (Journal of Economic Theory, 2002) Heckscher-Ohlin framework by removing sector-specific externalities in one country while maintaining all other assumptions previously made by the authors. We show that even though indeterminacy arises under autarky, it can be eliminated when trade takes place with another country exhibiting saddle-path stability. Consequently, support for indeterminacy from calibrating an autarkic framework should be treated with some degree of caution.

Keywords: Indeterminacy; Trade; Two-Country; Heckscher-Ohlin (search for similar items in EconPapers)
JEL-codes: E32 F00 F11 F43 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-int and nep-mac
Date: 2005-08

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Related works:
Working Paper: Autarkic Indeterminacy and Trade Determinacy (2007)
Journal Article: Autarkic indeterminacy and trade determinacy (2007)
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Persistent link: http://EconPapers.repec.org/RePEc:nus:nusewp:wp0507

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