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A Dynamic Heckscher–Ohlin Model: The Case of Costly Factor Reallocation |
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| Authors: | Murray C Kemp Koji Shimomura |
| Institution: | University of New South Wales;Kobe University |
| Abstract: | The role of the static Heckscher–Ohlin model in providing general equilibrium comparative statics is emphasized. It is shown that (i) market-clearing dynamics can be constructed if and only if the costly reallocation of factors is accommodated, and (ii) the introduction of market-clearing and resource-using dynamics fails to sharpen (and may even blunt) the comparative statics. Thus, a new (non-)Correspondence Principle is derived. |
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