Endogenous inequality and fluctuations in a two-country model
AbstractWe 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.
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Bibliographic InfoArticle provided by Elsevier in its journal Journal of Economic Theory.
Volume (Year): 144 (2009)
Issue (Month): 4 (July)
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Web page: http://www.elsevier.com/locate/inca/622869
Credit market imperfection Endogenous cycles Symmetry-breaking Two-country model;
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