GENERAL EQUILIBRIUM AND IMBALANCE OF TRADE.

The paper is a continuation of the study of dynamic models of general equilibrium. Such models differ from the standard static model only in the fact that instead of dealing with a finite set of economic agents one considers a population, that is, a sequence of agents each of which is active over a specified interval of time his economic life-time. For such models it is shown that there can be steady state international trade equilibria which are unbalanced meaning that the value of imports and exports of individual countries need not be equal. Specifically an example is given of a two country model with a single tradable good such that at equilibrium one of the countries exports a constant amount of this good to the other in every period and gets nothing in return. It is further shown that under suitable assumptions on the technologies of the countries such an unablanced equilibrium may be globally stable so that any initial trade pattern will converge to the unbalanced pattern. Author