Summary. In the present paper a tractable two-sector neo-classical growth model with heterogeneous agents is considered. The local dynamic properties of the equilibrium path are analyzed in relation with the underlying characteristics of the economy. In particular, the existence of fluctuations is related to the degree of heterogeneity in labor and in capital endowments. When applied to international trade theory, the analysis shows that free trade may distabilize a world economy that is originally stable under the regime of autarky.
Similar content being viewed by others
Author information
Authors and Affiliations
Additional information
Received: December 28, 1998; revised version: October 29, 1999
Rights and permissions
About this article
Cite this article
Ghiglino, C., Olszak-Duquenne, M. Inequalities and fluctuations in a dynamic general equilibrium model. Econ Theory 17, 1–24 (2001). https://doi.org/10.1017/S026646660117101X
Issue Date:
DOI: https://doi.org/10.1017/S026646660117101X