LARROSA Juan Manuel Ceferino
Strategic Equilibria in a Model of Economic Growth with Input Interdependence
LARROSA, JUAN M.C.
BULLETIN OF ECONOMIC RESEARCH
John Wiley & Sons
Lugar: Londres; Año: 2012 vol. 64 p. 537 - 537
Two countries face a strategic interdependence in producing intermediate goods. Producing these intermediate goods requires both domestic capital and another imported intermediate good. Individually, both economies determine a balanced growth path by taking into account this interdependence in different grades of awareness. By allowing for strategic interactions in the analysis, we adapted a two-agent dynamic setting and find an interior Markov perfect equilibrium as well as an open-loop equilibrium reflecting these different degrees of reaction. We find that main results resemble each other but growth rates will be higher when strategies are dynamically updated.