Accumulation and Growth in a Two-Country Model: A Simulation Approach

53 Pages Posted: 27 Mar 2001 Last revised: 27 Jul 2010

See all articles by David Lipton

David Lipton

National Bureau of Economic Research (NBER)

Jeffrey D. Sachs

Columbia University - Columbia Earth Institute; National Bureau of Economic Research (NBER)

Date Written: October 1980

Abstract

This paper analyzes saving and capital accumulation in a two-good growth model of two market economies in which economic agents optimize with perfect foresight. The goal is to present a model in which short-run dynamics and the steady-state are soundly integrated. We stress the importance of asset markets as the linkage that transmits disturbances both internationally and intertemporally. While many components of the model described below can be found in the literature on optimal consumption, investment and international growth models, we provide a consistent synthesis. Our framework permits the analysis of structural adjustment in the global economy, and the dynamic effects of a wide range of public policies.

Suggested Citation

Lipton, David and Sachs, Jeffrey D., Accumulation and Growth in a Two-Country Model: A Simulation Approach (October 1980). NBER Working Paper No. w0572. Available at SSRN: https://ssrn.com/abstract=264409

David Lipton

National Bureau of Economic Research (NBER)

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Jeffrey D. Sachs (Contact Author)

Columbia University - Columbia Earth Institute ( email )

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212-854-8704 (Phone)
212-854-8702 (Fax)

National Bureau of Economic Research (NBER)

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Cambridge, MA 02138
United States

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