We construct a dynamic Heckscher-Ohlin model in which the initial distribution of production factors across economies makes factor price equalization impossible. The model produces dynamics similar to those of the neoclassical growth model. However, free trade prevents identically parameterized...

This paper introduces Heckscher-Ohlin trade features into a two-country dynamic stochastic general equilibrium model, and studies the international transmission of productivity shocks through trade in goods. This framework improves upon existing international real business cycle models in that...

We construct and numerically solve a dynamic Heckscher-Ohlin model in which the initial distribution of production factors in the world makes world-wide factor price equalization impossible, and leads countries to group in two diversification cones. We study the dynamics of income components and...

The recent dismal performance of overall job creation has left Italy, as of the end of the 90's, with very low participation and high unemployment rates. Moreover, Italy exhibits a large regional dispersion of those variables when compared to similar European Union economies. The present paper,...

We present a dynamic comparative advantage model in which moderate reductions in trade costs can generate sizable increases in trade volumes over time. A fall in trade costs has two effects on the volume of trade. First, for given factor endowments, it raises the degree of specialization of...

This paper introduces Heckscher-Ohlin trade features into a two-country DSGE model, and studies how productivity shocks propagate through trade in goods. In comparison with standard models, (i) transitory shocks to productivity have permanent effects on country-level aggregate variables; (ii)...

We construct and numerically solve a dynamic Heckscher-Ohlin model which, depending on the distribution of production factors in the world and parameter values, allows for worldwide factor price equalization or complete specialization. We explore the dynamics of the model under different...

The extremely large disparities in employment rates across Italian regions, and the bad performance of the Italian economy in terms of job creation in the 80´s and early 90´s make job creation a top-priority in the economic policy agenda. This paper uses data on employment from 784 Local Labor...

We present a dynamic comparative advantage model in which moderate reductions in trade costs can generate sizable increases in trade volumes over time. A fall in trade costs has two effects on the volume of trade. First, for given factor endowments, it raises the degree of specialization of...

We construct and numerically solve a dynamic Hechscher-Ohlin model which, depending on the distribution of production factors in the world and parameter values, allows for worldwide factor price equalization or complete specialization. We explore the dynamics of the model under different...