Specific Factors Model and HOS Relationship (Transition)

This Solver-based model was designed to accompany Gilbert and Oladi (2008), although the focus of the paper was on the geometry of the problem not the numerical simulation. Essentially, the sheet combines the specific factors and HOS models into one sheet. The main purpose of the model is to show how an economy transitions from a short-run to a long-run equilibrium using simple transition dynamics as in the classic work of Mayer (1974) and Neary (1978), and thus demonstrate the close relationship between the specific factors and HOS models. The sub-models are the same as the separate single economy models, described here and here. A simple macro is used to solve the model and graph the results, although the experiments can be conducted without the use of the macro if preferred. A 'live' version of the model is also available.

Model Layout Guide


This model can accomplish all of the same exercises as the live version, the only changes being the location of the parameter/exogenous variable cells in the sheet. See the relevant section of the live version page for suggestions.