Endogenous inequality and fluctuations in a two-country model

Tomoo Kikuchi; John Stachurski

doi:10.1016/j.jet.2009.01.001

Endogenous inequality and fluctuations in a two-country model

Tomoo Kikuchi^*
, John Stachurski

^*Corresponding author for this work

Research output: Contribution to journal › Article › peer-review

12 Citations (Scopus)

Abstract

We study a two-country version of Matsuyama's [K. Matsuyama, Financial market globalization, symmetry-breaking, and endogenous inequality of nations, Econometrica 72 (2004) 853-884] world economy model. As in Matsuyama's model, symmetry-breaking can be observed, and symmetry-breaking generates endogenously determined levels of inequality. In addition, we show that when the countries differ in population size, their interaction through credit markets may lead to persistent endogenous fluctuations.

Original language	English
Pages (from-to)	1560-1571
Number of pages	12
Journal	Journal of Economic Theory
Volume	144
Issue number	4
DOIs	https://doi.org/10.1016/j.jet.2009.01.001
Publication status	Published - Jul 2009
Externally published	Yes

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10.1016/j.jet.2009.01.001

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abstract = "We study a two-country version of Matsuyama's [K. Matsuyama, Financial market globalization, symmetry-breaking, and endogenous inequality of nations, Econometrica 72 (2004) 853-884] world economy model. As in Matsuyama's model, symmetry-breaking can be observed, and symmetry-breaking generates endogenously determined levels of inequality. In addition, we show that when the countries differ in population size, their interaction through credit markets may lead to persistent endogenous fluctuations.",

keywords = "Credit market imperfection, Endogenous cycles, Symmetry-breaking, Two-country model",

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AB - We study a two-country version of Matsuyama's [K. Matsuyama, Financial market globalization, symmetry-breaking, and endogenous inequality of nations, Econometrica 72 (2004) 853-884] world economy model. As in Matsuyama's model, symmetry-breaking can be observed, and symmetry-breaking generates endogenously determined levels of inequality. In addition, we show that when the countries differ in population size, their interaction through credit markets may lead to persistent endogenous fluctuations.

KW - Credit market imperfection

KW - Endogenous cycles

KW - Symmetry-breaking

KW - Two-country model

UR - https://www.scopus.com/pages/publications/67649353270

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Endogenous inequality and fluctuations in a two-country model

Abstract

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