Time preference and international trade

Kazumichi Iwasa and Kazuo Nishimura

International Journal of Economic Theory, 2021, vol. 17, issue 1, 31-45

Abstract: We first consider a closed model, where households' time discount depends on externality in consumption. We can prove that there is a unique steady state, which is a saddle point. Then we extend the model to a two‐country world, and derive the condition on the effects of consumption externality under which there is a unique free trade steady state with saddle‐point stability.

Date: 2021
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