To read the full version of this content please select one of the options below:

Chapter 9 Distortions in the Two-Sector Dynamic General Equilibrium Model

Contemporary and Emerging Issues in Trade Theory and Policy

ISBN: 978-0-4445-3190-2, eISBN: 978-1-84950-541-3

ISSN: 1574-8715

Publication date: 2 June 2008

Abstract

We extend the Jones (1971) analysis of the effects of distortions in 2×2 trade models to the case of a two-sector dynamic general equilibrium model of a small open economy with capital accumulation. We do a comparative steady state analysis for the effect of policy changes on factor prices and the capital stock, and examine the dynamics of the system in the neighborhood of the steady state. We also show that the system will have multiple equilibria when value and physical factor intensity rankings of the sectors do not agree.

Keywords

Citation

Bond, E.W. and Driskill, R.A. (2008), "Chapter 9 Distortions in the Two-Sector Dynamic General Equilibrium Model", Marjit, S. and Yu, E.S.H. (Ed.) Contemporary and Emerging Issues in Trade Theory and Policy (Frontiers of Economics and Globalization, Vol. 4), Emerald Group Publishing Limited, Bingley, pp. 165-190. https://doi.org/10.1016/S1574-8715(08)04009-8

Publisher

:

Emerald Group Publishing Limited

Copyright © 2008, Emerald Group Publishing Limited