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Diskussionsbeiträge - Serie II No. 95
Universität Konstanz, Sonderforschungsbereich 178 - Internationalisierung der Wirtschaft, Konstanz
Since static models of partial factor mobility cannot be interpreted dynamically to explain factor accumulation and reallocation over time this model analyzes incomplete factor mobility as a problem of investment theory in a dynamic context. Convex costs of adjustment generate finite investment demand and finite speed of adjustment to exogenous shocks. A two-sector version of the dynamic theory of the firm is developed and incorporated in a small open economy model. The comparative static results of this model are derived for the cases of international mobile and international immobile financial capital, where the latter case calls for numerical simulations to get some more insights in the comparative static behaviour.
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