TY  - JOUR
AU  - Bajona,Claustre
AU  - Kehoe,Timothy J.
TI  - Demographics in Dynamic Heckscher-Ohlin Models:  Overlapping Generations Versus Infinitely Lived Consumers
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 12566
PY  - 2006
Y2  - October 2006
UR  - http://www.nber.org/papers/w12566
L1  - http://www.nber.org/papers/w12566.pdf
N1  - Author contact info:
Claustre Bajona
Department of Economics
5250 University Drive
Coral Gables, FL 33124-6550
E-Mail: cbajona@exchange.sba.miami.edu

Timothy J. Kehoe
University of Minnesota
Department of Economics
1925 Fourth Street South
Minneapolis, MN 55455-0462
Tel: 612/625-1589
Fax: 612/204-5515
E-Mail: tkehoe@umn.edu
AB  - This paper contrasts the properties of dynamic Heckscher-Ohlin models with overlapping generations with those of models with infinitely lived consumers.  In both environments, if capital is mobile across countries, factor price equalization occurs after the initial period.  In general, however, the properties of equilibria differ drastically across environments:  With infinitely lived consumers, we find that factor prices equalize in any steady state or cycle and that, in general, there is positive trade in any steady state or cycle.  With overlapping generations, in contrast, we construct examples with steady states and cycles in which factor prices are not equalized, and we find that any equilibrium that converges to a steady state or cycle with factor price equalization has no trade after a finite number of periods.
ER  -