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Complementarity, growth, and trade

Seppo Honkapohja () and Arja Turunen-Red

Canadian Journal of Economics, 2002, vol. 35, issue 3, 495-516

Abstract: We consider an endogenous growth model with international trade in complementary capital goods. The model possesses several distinct, balanced growth solutions, which we classify using stability under adaptive learning. Some of the equilibria can involve growth rates much higher than others. We show that, in addition to a small (usually positive) effect on a given equilibrium, an expansion in trade may sometimes yield a much larger, sudden jump in growth. The small effect on the initial equilibrium may reduce growth if the opportunity cost of capital rises very fast as growth accelerates.

JEL-codes: F12 F15 O41 (search for similar items in EconPapers)
Date: 2002
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Working Paper: Complementarity, Growth and Trade (1999) Downloads
Working Paper: Complementarity, Growth and Trade (1999)
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