Current Account Dynamics in a Heckscher-Ohlin Economy with Finite Horizons

Arman Mansoorian

Working Paper from Economics Department, Queen's University

Abstract: The Heckscher-Ohlin model is incorporated into the overlapping generations framework of Blanchard (1985), and the effects of a terms of trade change on the current account are studied. As financial wealth is insurable, the rate of discount for future income from capital is smaller than the rate of discount for future labour income. Thus, factor intensities play an important role in current account dynamics. The size of the rate of time preference also plays an important role.

Pages: 22 pages
Date: 1988
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Persistent link: https://EconPapers.repec.org/RePEc:qed:wpaper:733

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