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International trade and capital accumulation in an overlapping generations model with a public intermediate good
Author(s) -
Shinozaki Tsuyoshi,
Tawada Makoto,
Yanagihara Mitsuyoshi
Publication year - 2019
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/roie.12396
Subject(s) - economics , overlapping generations model , capital (architecture) , capital intensity , capital accumulation , productivity , public capital , capital deepening , production (economics) , investment (military) , welfare , international economics , intermediate good , capital formation , physical capital , monetary economics , labour economics , macroeconomics , financial capital , public investment , human capital , market economy , archaeology , politics , political science , law , history
Abstract We investigate the effects of a public intermediate good on trade patterns, capital accumulation, and the gains from trade in a two‐country, three‐sector overlapping generations model. A public intermediate good affects not only the productivity of private production but capital accumulation; thus, the results differ from those obtained in previous studies. First, opening to trade may accelerate capital accumulation in the higher‐savings country. Additionally, the country producing a public intermediate good more (which is labor‐intensive) may be the importer of the investment good (which is the most capital‐intensive). Finally, the lower‐savings country may have lower steady‐state welfare under trade.