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| Author: | Cremers, E. |
| Title: | Capital markets and dimension in neoclassical models of growth with trade |
| Journal: | Journal of International Economics
1997 : AUG, VOL. 43:1/2, p. 155-172 |
| Index terms: | CAPITAL MARKETS GROWTH TRADE |
| Language: | eng |
| Abstract: | This paper explores the role of arbitrary assumptions regarding dimension and the tradeability of capital in neoclassical growth models. It is shown that international markets for physical and financial capital are required to reproduce the competitive world growth path only when the number of traded (non-capital) goods is less than the number of factors, provided that countries are diversified along their growth paths. Capital markets compensate for lacking composition good markets in models with low dimension, thus reinforcing an earlier static argument that trade theory requires a sufficient number of markets, rather than particular dimensional attributes. |
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