In models in which convergence in income levels across closed countries is driven by faster accumulation of a productive factor in the poorer countries, opening these countries to trade can stop convergence and even cause divergence. We make this point using a dynamic Heckscher-Ohlin model - a...

The paper provides an explanation for the secular increase in the price of services relative to that of manufactured goods that relies on capital accumulation rather than on an exogenous total factor productivity growth differential. The key assumptions of the two-sector, intertemporal...

The main purpose of this study is to explore the interrelations between global economic growth and the changing composition of global trade. I define a global unbalanced growth path as a situation in which there exists a global constant return to capital. I use this definition to explore two...

We develop and calibrate a model where differences in factor endowments lead countries to trade different goods, so that the existence of international trade changes the sectorial composition of output from one country to another. Gains from trade reflect in total factor productivity. We perform...

This paper constructs a simple endogenous growth model featuring the product cycle, i.e., the transition from monopoly to perfect competition, and studies its implications for both asset market and business cycle statistics. I find that the product cycle is a powerful amplification mechanism;...

A large portion of differences in output per capita across countries is explained by differences in total factor productivity (TFP). In this article, we summarize a recent literature — and the articles in this special issue on misallocation and productivity — that focus on the...

Periods of economic boom with rapid credit and GDP growth can be followed by sudden busts. In the presence of financial markets imperfections, a simple modification of a neoclassical growth model can fully account for this behavior. I study a growth model for a small open economy where...

This paper studies an urban growth model where learning through personal contacts could be more effective in a denser locale, whereas the effectiveness of learning through impersonal means of communications depends principally on the technology of communications rather than on the locale in...

Many applications in economics use multi-sector versions of the growth model. In this paper, we measure the income shares of capital and labor at the sectoral level for the U.S. economy. We also decompose the capital shares into the income shares of land, structures, and equipment. We find that...

All industrialized countries have experienced a transition from high birth rates, land-based production and stagnant standards of living to low birth rates and sustained income growth. To develop a better understanding of these economic and demographic transformations and the link between them,...