The neoclassical growth model remains a crucial reference point for economists thinking about cross-country income dynamics, but it imposes strong assumptions about goods and capital markets. Benny Kleinman, Ernest Liu, Stephen Redding and Motohiro Yogo present a generalised version of the model which allows for costly international trade and capital frictions, and explores the implications of this new specification by modelling the effects of decoupling between the US and China.

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31 January 2024

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Vox EU

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https://cepr.org/voxeu/columns/neoclassical-growth-interdependent-world

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