Exercise 19.20. * Consider the model of Section 19.4, except that instead of utility maximization by a representative household, assume that each country saves a constant fraction sj of its income. Show that terms of trade effects will be present in equilibrium, but the steady state will be “degenerate,” with the relative prices of goods supplied by the highest saving country going to zero. Explain why exogenous savings versus dynamic utility maximization give different answers in this case.