There seems to exist a consensus that transnational labour mobility will help to equalize workers` incomes and domestic product per head between the member countries of a monetary union. However, the t́he new economic geography` which stresses the centrifugal spatial forces of economic activity...

The paper develops a tractable way to incorporate the micro structure of dual models of international trade into a standard class of dynamic open-economy macro models. In the process, it develops the concept of a dynamic factor price equalization set and an integrated intertemporal equilibrium....