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International Capital Movements In the Solow and Overlapping Generations Growth Models *
Author(s) -
Ruffin Roy J.,
Yoon Young Deak
Publication year - 1993
Publication title -
review of international economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.513
H-Index - 58
eISSN - 1467-9396
pISSN - 0965-7576
DOI - 10.1111/j.1467-9396.1993.tb00010.x
Subject(s) - overlapping generations model , autarky , economics , growth model , simple (philosophy) , capital (architecture) , capital accumulation , compensation (psychology) , macroeconomics , microeconomics , neoclassical economics , human capital , market economy , history , psychology , philosophy , archaeology , epistemology , psychoanalysis , welfare
This paper examines capital movements in the overlapping generations and Solow models. For the overlapping generations model, a simple compensation scheme is developed to show how the gaining generation(s) can always compensate the losing generation(s) and still gain in the move from autarky to free capital mobility. Moreover, unlike the Solow model, the move to an open economy for the overlapping generations model has a tendency to reduce the assets held by the capital‐exporting country.