This paper constructs a dynamic two-country model with country-specific production externalities and inspects the presence of equilibrium indeterminacy under alternative trade structures. It is shown that the presence of belief?driven economic fluctuations caused by equilibrium indeterminacy is...

This paper explores the relation between capital accumulation and transformation of industrial structure in a small open-economy. Using a three-sector, neoclassical growth model with non-homothetic preferences, we examine dynamic behavior of the small country in the alternative trade regimes. We...

This paper explores a dynamic two-country model with production externalities in which capital goods are not traded and international lending and borrowing are allowed. Unlike the integrated world economy model based on the Heckscher-Ohlin setting, our model yields indeterminacy of equilibrium...