A Dynamic Heckscher–Ohlin Model: The Case of Costly Factor Reallocation

Murray Kemp and Koji Shimomura

The Japanese Economic Review, 2003, vol. 54, issue 3, 237-252

Abstract: The role of the static Heckscher–Ohlin model in providing general equilibrium comparative statics is emphasized. It is shown that (i) market‐clearing dynamics can be constructed if and only if the costly reallocation of factors is accommodated, and (ii) the introduction of market‐clearing and resource‐using dynamics fails to sharpen (and may even blunt) the comparative statics. Thus, a new (non‐)Correspondence Principle is derived.

Date: 2003
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