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Time preference and international trade
Author(s) -
Iwasa Kazumichi,
Nishimura Kazuo
Publication year - 2021
Publication title -
international journal of economic theory
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.351
H-Index - 11
eISSN - 1742-7363
pISSN - 1742-7355
DOI - 10.1111/ijet.12291
Subject(s) - economics , consumption (sociology) , externality , saddle point , preference , stability (learning theory) , point (geometry) , microeconomics , steady state (chemistry) , time preference , saddle , mathematical economics , econometrics , mathematics , computer science , mathematical optimization , social science , chemistry , geometry , machine learning , sociology
We first consider a closed model, where households' time discount depends on externality in consumption. We can prove that there is a unique steady state, which is a saddle point. Then we extend the model to a two‐country world, and derive the condition on the effects of consumption externality under which there is a unique free trade steady state with saddle‐point stability.