Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/173028 
Authors: 
Year of Publication: 
2017
Series/Report no.: 
CESifo Working Paper No. 6752
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Abstract: 
Using a dynamic two-country two-commodity Ricardian model where preference for money (or wealth) leads to aggregate demand deficiency, this paper examines the relationship between the two countries’ relative population size and their specialization patterns, employment and consumption. When the countries have similar population sizes, they specialize in respective commodities with comparative advantage. In this case a larger foreign, or a smaller home, population raises the relative price of the home commodity. It raises home real income and consumption per capita if full employment prevails in the home country. If unemployment appears, however, home employment and consumption per capita decrease.
Subjects: 
secular demand stagnation
liquidity trap
unemployment
population
specialization pattern
JEL: 
F41
E24
E32
Document Type: 
Working Paper
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