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Trade Effects on the Personal Distribution of Wealth

Author

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  • Francesc Obiols-Homs

    (Centro de Investigacion Economica (CIE), Instituto Tecnologico Autonomo de Mexico (ITAM))

Abstract

This paper develops a dynamic Heckscher-Ohlin model and studies the interaction between international trade and wealth distribution dynamics. I also study how differences in the cost of financial intermediation among countries may affect the pattern of trade and wealth dynamics. Relative to the inequality it would have prevailed under autarky, I find that trade promotes a decline (an increase) in inequality when the economy converges to the steady state form below (above). However, with trade inequality increases (declines) during the transition from below (above). I also find that trade may alleviate frictions in the financial intermediation sector in economies where these frictions are larger. In those economies, trade may in fact promote a higher income than under autarky.

Suggested Citation

  • Francesc Obiols-Homs, 2002. "Trade Effects on the Personal Distribution of Wealth," Working Papers 0208, Centro de Investigacion Economica, ITAM.
    • Handle: RePEc:cie:wpaper:0208
    as

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    References listed on IDEAS

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    Cited by:

    1. Claustre Bajona & Timothy J. Kehoe, 2006. "Demographics in dynamic Heckscher-Ohlin models: overlapping generations versus infinitely lived consumers," Staff Report 377, Federal Reserve Bank of Minneapolis.
    2. Claustre Bajona & Timothy Kehoe, 2010. "Trade, Growth, and Convergence in a Dynamic Heckscher-Ohlin Model," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 13(3), pages 487-513, July.

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    More about this item

    Keywords

    International Trade; Wealth Distribution; Financial Intermediation;
    All these keywords.

    JEL classification:

    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade
    • F17 - International Economics - - Trade - - - Trade Forecasting and Simulation

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