A two-country model of trade and growth with intersectoral knowledge spillovers

Takumi Naito, Ryoji Ohdoi

Research output: Contribution to journalArticle

1 Citation (Scopus)

Abstract

We formulate a two-country, two-good, two-factor endogenous growth model with learning by doing and intersectoral knowledge spillovers. Our model exhibits no transitional dynamics because of constant returns to capital, the existence of only one state variable for each country, and the factor price equalization theorem. By applying our model to the problem of aid and growth, we show that a permanent increase in untied aid raises the common growth rate if and only if the propensity to consume the capital-intensive good in the recipient country is larger than in the donor country.

Original languageEnglish
Pages (from-to)39-58
Number of pages20
JournalJournal of Economics/ Zeitschrift fur Nationalokonomie
Volume103
Issue number1
DOIs
Publication statusPublished - 2011 May 1
Externally publishedYes

Keywords

  • Aid and growth
  • Endogenous growth
  • Factor price equalization theorem
  • Intersectoral knowledge spillovers
  • Stolper-samuelson theorem

ASJC Scopus subject areas

  • Business, Management and Accounting(all)
  • Economics and Econometrics

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