The decline in the real interest rate as well as the rise in the real wage rate would be smaller if the model were modified to permit international trade in goods and capital.I'm pretty sure that in the real world the US economy permits international trade in goods and capital.
A smaller rise, not a decline.
A smaller rise, not a decline.
I just re-read/skimmed the paper and I don't find any such footnote or discussion in the body of the paper.
Seems as though we could be reading two different papers. Where did you get your copy? Can you provide a link? I looked at the NBER website....didn't find it there...is it archived somewhere?