Exercise 19.15. (1) Derive (19.39) and (19.40). (2) Explain why different parameters determine cross-country income dispersion in
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Exercise 19.15. (1) Derive (19.39) and (19.40). (2) Explain why different parameters determine cross-country income dispersion in these two equations. (3) Using reasonable parameter values show how the model with international trade can generate much larger differences in income per capita across countries resulting from small parameter differences.
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