Dynamic adjustment in open economies

Jürgen Meckl

No 121, Discussion Papers, Series II from University of Konstanz, Collaborative Research Centre (SFB) 178 "Internationalization of the Economy"

Abstract: This paper analyzes adjustment to exogenous shocks in a dynamic version of the specific-factors model in which capital is assumed to be a quasi-fixed factor. Capital allocation is treated as an issue in investment theory, thus endogeniz-ing long-run capital stocks of industries. Convex costs of adjustment generate finite Keynesian investment demand functions which are incorporated in a two-sector trade model. Depending on the source of the exogenous shock comparative static effects are ambiguous and the adjustment path to the long-run equilib-rium may be characterized by an overadjustment of capital stocks and/or of the national product. The long-run equilibrium is almost always characterized by non-equalization of capital rentals.

Date: 1990
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
https://www.econstor.eu/bitstream/10419/101617/1/769769926.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:zbw:kondp2:121

Access Statistics for this paper

More papers in Discussion Papers, Series II from University of Konstanz, Collaborative Research Centre (SFB) 178 "Internationalization of the Economy" Contact information at EDIRC.
Bibliographic data for series maintained by ZBW - Leibniz Information Centre for Economics ().