NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

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

David Lipton, Jeffrey Sachs

NBER Working Paper No. 572
Issued in October 1980
NBER Program(s):   ITI   IFM

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.

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Published:

  • with D. Lipton, Journal of International Economics, 15(1/2), 135-159 August 1983 ,
  • Lipton, David and Jeffrey Sachs. "Accumulation and Growth in a Two-Country Model: A Simulation Approach." Journal of Economic Literature, Vol. 22, No. 1, (March 1984).

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