Trade and Growth: a simple model with notso-simple implications

Abstract

We present a simple model of international trade (IT) and growth.The model yields a unique equilibrium path in which the relationship betweenexogenous and endogenous variables does not resemble the equations estimatedby the empirical literature: Ours are not linear, despite the fact that technologyand demand are linear, they do not include variables used in this literature likeshares of IT and investment and include variables that have never been usedin this literature such as comparative and absolute advantage, specializationpatterns, saving habits and technology of partner countries. Finally, the impactof the initial level of income and the number of years that the economy hasbeen open is far more complicated than had been assumed by the literature.