We extend the model of Nishimura and Shimomura (2002) to consider a two-country framework where under autarky indeterminacy arises in one country but determinacy in the other, and show that indeterminacy could be eliminated when trade takes place between the two. We are grateful to Professor Makoto Yano and an anonymous referee whose comments have led to significant improvements in the paper.1 Although their focus is not on indeterminacy, Nishimura and Yano (1993) are among the very first to theoretically examine how a country's pre-trade capital accumulation pattern might coincide or not with its and the world's aggregate post-trade patterns, which in fact is an investigation on the transmission of capital accumulation patterns via trade.
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