Premium
Factor Accumulation and Trade: Dynamic Comparative Advantage with Endogenous Physical and Human Capital*
Author(s) -
Bond Eric W.,
Trask Kathleen,
Wang Ping
Publication year - 2003
Publication title -
international economic review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 2.658
H-Index - 86
eISSN - 1468-2354
pISSN - 0020-6598
DOI - 10.1111/1468-2354.t01-1-00099
Subject(s) - economics , endogenous growth theory , physical capital , human capital , arbitrage , microeconomics , capital accumulation , capital (architecture) , econometrics , monetary economics , financial economics , market economy , archaeology , history
This article develops a two‐country endogenous growth model with accumulation of both physical and human capital. We establish the existence of two‐country balanced growth equilibria with physical and human capital in which a static and dynamic version of the Heckscher–Ohlin (HO) hypothesis hold true. We also show the existence of unbalanced growth equilibria in which the static and dynamic HO hypotheses can be violated. The multiplicity of paths with international trade emerge as a result of the intertemporal no‐arbitrage condition when factor prices are equalized across countries.