Oscillations in a Multi-Country Free Trade Model with Endogenous Wealth and Environment
Oscillations in a Multi-Country Free Trade Model with Endogenous Wealth and Environment

Summary/Abstract: This study shows economic oscillations due to periodic changes in some parameters in the multi-country economy with endogenous physical capital and wealth accumulation and environmental change proposed by Zhang (2014). The Zhang’s model analyses not only inequalities in income, wealth and economic structures among countries, but also differences in environmental changes between countries. The main difference of this study from Zhang’s model is that this study treats all the time-independent parameters as time-dependent. This study is interested in time-dependent shocks on the evolution of the economic system. After showing that the dynamics of J - country world economy is controlled by 2J differential equations, we simulate the motion of the model with three countries and carry out comparative dynamic analysis with regard to different time-dependent shocks. In association with different fluctuations in parameters, different economies experience different oscillations.

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