Transmission of Sustained Growth through the Terms of Trade in an Endogenous Growth Model

  • Carmen Álvarez Albelo, Fernando Perera Tallo
  • Published 2004

Abstract

This paper develops a two-country model of endogenous growth and international trade. In autarky just one of the countries is capable of generating growth. The trade situation may be characterized by complete or incomplete specialization. In either case, international trade transmits sustained growth to the stagnated economy simply because the terms of trade become each time more favorable to this country. The existence of a non-reproducible factor in the country that grows in autarky is crucial to ensure growth transmission. Moreover, under incomplete specialization the world economy behaves as an integrated economy, and countries converge in per capita income.

Cite this paper

@inproceedings{Albelo2004TransmissionOS, title={Transmission of Sustained Growth through the Terms of Trade in an Endogenous Growth Model}, author={Carmen {\'A}lvarez Albelo and Fernando Perera Tallo}, year={2004} }