between two activities: producing goods with the production-related knowledge they already have, and interacting with others … and its rate of learning and real growth. Individuals' time allocation decisions depend on the knowledge distribution … time allocations of everyone in the economy in turn determine the evolution of its knowledge distribution. We construct the …

trade. One simple taxonomy separates the theory into vertical' models in which firms geographically separate activities by … countries. We refer to a hybrid of these two as the '¤ knowledge capital model'. In this paper, we nest these three models …