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Capital flows and wealth distribution in a global economy with asymmetric countries

Author

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  • Chen, Been-Lon
  • Hu, Yunfang
  • Mino, Kazuo

Abstract

Focusing on international differences in firms’ production efficiency, financial constraints, and savers’ time discount rates, this study explores how these factors affect a country’s long-run asset position and the global distribution of wealth. Using a dynamic two-country model with financial frictions and firm heterogeneity, we clarify the roles of these asymmetric factors in the long-run equilibrium of the world economy. Due to the tractability of our model. we can obtain key results analytically using simple graphical expositions. Numerical examples are also provided to evaluate the comparative statics in the steady state and transition dynamics of the global economy.

Suggested Citation

  • Chen, Been-Lon & Hu, Yunfang & Mino, Kazuo, 2025. "Capital flows and wealth distribution in a global economy with asymmetric countries," Economic Modelling, Elsevier, vol. 151(C).
    • Handle: RePEc:eee:ecmode:v:151:y:2025:i:c:s0264999325002093
    DOI: 10.1016/j.econmod.2025.107214
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    Keywords

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    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

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