MIDDLE EAST TECHNICAL UNIVERSITY

Department of Economics Seminar Series 

"Borrowing Constraints, North-South Trade and Sustainable Current Account Patterns in Neoclassical Growth"

by

Selen Andıç

(Middle East Technical University)

Date: December 9, 2024 (Monday)

Time: 14:00

Place: F106, FEAS - Building A

Abstract

In the neoclassical growth model with two blocks of countries -South and North- trade and borrowing constraints lead to a long-run equilibrium where each block converges to a different per capita income at a different rate while running a permanently unbalanced current account. Compared with autarky, trade causes long-run increases in per capita income and capital, with relatively higher gains for the North. World average income is highest, however, when the borrowing constraint is eliminated.