International Impact of Productivity Shocks with Endogenous Labor Supply: The Two Large Economy Case

Ali Kocyigit ()
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Ali Kocyigit: Florida International University, Postal: Department of Economics, University Park, Miami, Florida 33199, U.S.A

Journal of Economic Integration, 1998, vol. 13, 464-484

Abstract:

The study constructs a deterministic, overlapping-generations, two-economy model. The analysis is conducted in the context of an infinitely-lived economy where individuals have finite (two-periods) lifetimes. The model shows that a positive productivity shock produces positive correlation between savings and investment despite the fact that there is perfect international capital mobility. F u rt h e r, the simulation results show that the endogeneity of the labor supply gives rise to cyclical adjustment of the economy towards its steady state.

Keywords: International Impact; Productivity Shocks (search for similar items in EconPapers)
JEL-codes: F40 (search for similar items in EconPapers)
Date: 1998
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Persistent link: https://EconPapers.repec.org/RePEc:ris:integr:0082

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