Two-country model, Heckscher–Ohlin, Inferior good, Multiple equilibria, Indeterminacy, E13, E32, F11, F43,

In this paper, we show that the main results of dynamic Heckscher-Ohlin models (with non-homothetic preferences) can be derived from diagrams which represent the basic functions in static models such as the Rybczynski line, income expansion paths, and excess demand functions at steady states. Results include not only the existence and the multiplicity of steady states in autarky and under free trade, but also their stabilities and the static and dynamic Heckscher-Ohlin theorems.

We extend a dynamic Heckscher-Ohlin model with production externality presented in recent work by Nishimura and Shimomura by assuming a consumable capital good. Following work by Bond, Iwasa, and Nishimura, we define a steady-state excess demand function and derive the locus of home and foreign capital stocks that are consistent with a steady-state equilibrium under free trade. Also, we examine the relationship between externality and local dynamics in autarky or under free trade, which includes a phase diagram analysis. Then we show that opening trade can generate expectation-driven fluctuations in a world trade market.

Giffen behavior, Utility function, Standard of living, Expenditure share, D01, D11,

This note proposes a two-country monopolistic competition model of service trade that captures the role of time zone di erences as a determinant of trade patterns. It is shown that the utilization of time zone di erences induces drastic change in trade patterns: Due to taking advantage of time zone di erences, service rms learve larger countries for smaller countries.