{"id":9334,"date":"2022-07-27T07:01:18","date_gmt":"2022-07-27T07:01:18","guid":{"rendered":"https:\/\/depocen.org\/publications\/a-stochastic-dynamic-model-of-trade-and-growthconvergence-and-diversification\/"},"modified":"2022-07-27T07:01:18","modified_gmt":"2022-07-27T07:01:18","slug":"a-stochastic-dynamic-model-of-trade-and-growthconvergence-and-diversification","status":"publish","type":"publications","link":"https:\/\/depocen.org\/vi\/publications\/a-stochastic-dynamic-model-of-trade-and-growthconvergence-and-diversification\/","title":{"rendered":"A Stochastic Dynamic Model of Trade and Growth:\r\nConvergence and Diversification"},"content":{"rendered":"<p>There is a growing literature that studies the properties of models that combine<br \/>\ninternational trade and neoclassical growth theory, but mostly in a deterministic<br \/>\nsetting. In this paper we introduce uncertainty in a dynamic<br \/>\nHeckscher-Ohlin model and characterize the equilibrium of a small open<br \/>\neconomy in such an environment. We show that, when trade is balanced<br \/>\nperiod-by-period, the per capita output and consumption of a small open<br \/>\neconomy converge to an invariant distribution that is independent of the initial<br \/>\nwealth. Further, at the invariant distribution, there are periods in which<br \/>\nthe small economy diversifies. Numerical simulations show that the speed<br \/>\nof convergence increases with the size of the shocks. In the limit, when<br \/>\nthere is no uncertainty, there is no convergence and countries may specialize<br \/>\npermanently. The paper highlights the role of market incompleteness, as a<br \/>\nresult of the period-by-period trade balance, in this setup. Through an analytical<br \/>\nexample we also illustrate the importance of country specific risk in<br \/>\ndelivering our results.<\/p>\n","protected":false},"featured_media":0,"template":"","cate_publications":[],"author_publications":[1810,1811],"topic_publications":[],"class_list":["post-9334","publications","type-publications","status-publish","hentry","author_publications-partha-chatterjee","author_publications-malik-shukayev"],"acf":[],"_links":{"self":[{"href":"https:\/\/depocen.org\/vi\/wp-json\/wp\/v2\/publications\/9334","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/depocen.org\/vi\/wp-json\/wp\/v2\/publications"}],"about":[{"href":"https:\/\/depocen.org\/vi\/wp-json\/wp\/v2\/types\/publications"}],"wp:attachment":[{"href":"https:\/\/depocen.org\/vi\/wp-json\/wp\/v2\/media?parent=9334"}],"wp:term":[{"taxonomy":"cate_publications","embeddable":true,"href":"https:\/\/depocen.org\/vi\/wp-json\/wp\/v2\/cate_publications?post=9334"},{"taxonomy":"author_publications","embeddable":true,"href":"https:\/\/depocen.org\/vi\/wp-json\/wp\/v2\/author_publications?post=9334"},{"taxonomy":"topic_publications","embeddable":true,"href":"https:\/\/depocen.org\/vi\/wp-json\/wp\/v2\/topic_publications?post=9334"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}