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Monopoly Wealth and International Debt

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  • Eaton, Jonathan

Abstract

Rents generated by long-lasting government policies may be capitalized as assets. With life-cycle saving behavior, these rents raise international indebtedness. Shifts in policy that affect their capitalized value generate correlated movements in the current account and the real exchange rate. Eliminating rent-creating policies imposes a capital loss born entirely by generations currently alive, while the benefit of removing a distortion is shared between those alive and unborn generations. Reform may therefore reduce the expected welfare of everyone alive. With monopoly in the provision of nontraded goods, there may be multiple Pareto-ranked equilibria. Copyright 1989 by Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association.

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  • Eaton, Jonathan, 1989. "Monopoly Wealth and International Debt," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 30(1), pages 33-48, February.
    • Handle: RePEc:ier:iecrev:v:30:y:1989:i:1:p:33-48
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    Cited by:

    1. Keuschnigg, Christian & Kohler, Wilhelm, 1996. "Commercial policy and dynamic adjustment under monopolistic competition," Journal of International Economics, Elsevier, vol. 40(3-4), pages 373-409, May.
    2. Bertrand Crettez, 1999. "Concurrence à la Cournot, accumulation du capital et bulle," Annals of Economics and Statistics, GENES, issue 53, pages 69-91.
    3. repec:adr:anecst:y:1999:i:53:p:04 is not listed on IDEAS
    4. Hung‐Ju Chen & Chen‐Min Hsu, 2009. "Demand Changes and Real Exchange Rate Dynamics in a Finite‐Horizon Model with Sectoral Adjustment Costs," Southern Economic Journal, John Wiley & Sons, vol. 75(4), pages 1191-1211, April.
    5. Ronald Ravinesh Kumar & Peter J. Stauvermann, 2021. "Revisited: Monopoly and Long-Run Capital Accumulation in Two-Sector Overlapping Generation Model," JRFM, MDPI, vol. 14(7), pages 1-19, July.

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