Borrowing Constraints, North-South Trade and Sustainable Current Accounts in Neoclassical Growth

What are the consequences for per capita incomes, convergence rates, and capital accounts under conditions of free trade and borrowing frictions between rich and poor countries? In Andic (2024), I extend the standard neoclassical growth model by assuming free trade in intermediate goods and imperfect capital flows. Comparative advantage, based on productivities, sets the pattern of trade as the South specializing in less sophisticated intermediates and the North in more sophisticated ones. Southern countries are capital poor and borrowing constrained by assumption. In this setting, I first show that the South attains a lower per capita GDP in the long-run compared to the North. Yet, its rate of convergence is relatively higher. Second, I demonstrate that the constraint on borrowing is endogenous. Third, the South runs a current account deficit in the long-run with the North. Finally, I discuss trade can lead to gains in terms of per capita capital compared to autarky and improve the world average income. Quantitatively, my analysis reveals that long-run per capita income of the South is 15 percent of the North. The conditional convergence rate is around 9 percent in the South and 3 percent in the North. The borrowing limit is 24 percent leading to a current account deficit of 2.5 percent in the South and a surplus of 0.4 percent in the North. Both blocks have static gains from trade in the constrained open economy compared to an autarky, if not dynamically better off. The relative gain of the North is found to be higher. However, the world average income more than doubles when the borrowing constraint is eliminated. This work employs publicly available data from the IMF Balance of Payments and International Investment Position, World Bank World Development Indicators, World Bank International Debt Statistics and PWT10. It uses Stata15 and Python PyCharm to generate all the figures and tables, which can be replicated with the codes and data files provided below. Andic, S. (2024). Borrowing Constraints, North-South Trade and Sustainable Current Accounts in Neoclassical Growth, under review in Journal of International Economics.在富国与穷国开展自由贸易且存在借贷摩擦的条件下，人均收入、趋同速率与资本账户将受到何种影响？在Andic(2024)的研究中，本文通过假设中间品自由贸易与资本流动不完全，拓展了标准新古典增长模型。基于生产率的比较优势决定了贸易格局：南方经济体（South）专业化生产技术复杂度较低的中间品，北方经济体（North）则专业化生产技术复杂度更高的中间品。根据模型设定，南方经济体资本匮乏且面临借贷约束。在此框架下，本文首先证明：长期来看，南方经济体的人均GDP低于北方经济体，但其条件趋同速率相对更高。其次，本文证明借贷约束具有内生性。第三，长期来看，南方经济体对北方经济体存在经常账户逆差。最后，本文探讨了：相较于封闭经济（autarky），自由贸易可提升人均资本水平，并改善全球平均收入。量化分析结果显示，南方经济体的长期人均收入仅为北方经济体的15%。南方经济体的条件趋同速率约为9%，北方经济体则约为3%。模型设定的借贷上限为24%，由此导致南方经济体的经常账户逆差占GDP的2.5%，北方经济体的经常账户顺差占GDP的0.4%。相较于封闭经济，受约束开放经济下两大经济体阵营均可从贸易中获取静态贸易收益，即便未必能实现动态福利改善。研究发现北方经济体的相对贸易收益更高。然而，若消除借贷约束，全球平均收入将提升至原来的两倍以上。本研究使用的公开数据来自国际货币基金组织（IMF）国际收支与国际投资头寸数据库、世界银行世界发展指标（World Development Indicators）数据库、世界银行国际债务统计（International Debt Statistics）数据库以及宾州世界表10.0（PWT10）。本文使用Stata15与Python PyCharm生成全部图表与表格，读者可通过下文提供的代码与数据文件复现本研究的全部结果。Andic, S. (2024). 《借贷约束、南北贸易与新古典增长框架下的可持续经常账户》，目前处于《国际经济学杂志》（Journal of International Economics）审稿阶段。