Trade structure and belief-driven fluctuations in a global economy

► We examine a dynamic two-country model with production externalities. ► We show that equilibrium indeterminacy is closely related to the trade structure. ► Indeterminacy easily holds if investment goods are not traded. ► In other trade patterns, the indeterminacy conditions are the same as in autarchy. ► The long-run wealth distribution in the presence of indeterminacy is discussed.