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Monopoly Wealth and International Debt

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Listed author(s):
  • 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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Article provided by Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association in its journal International Economic Review.

Volume (Year): 30 (1989)
Issue (Month): 1 (February)
Pages: 33-48

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Handle: RePEc:ier:iecrev:v:30:y:1989:i:1:p:33-48
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  1. Brock, William A & Magee, Stephen P, 1978. "The Economics of Special Interest Politics: The Case of the Tariff," American Economic Review, American Economic Association, vol. 68(2), pages 246-250, May.
  2. Bhagwati, Jagdish N, 1982. "Directly Unproductive, Profit-seeking (DUP) Activities," Journal of Political Economy, University of Chicago Press, vol. 90(5), pages 988-1002, October.
  3. Dixit, Avinash K & Stiglitz, Joseph E, 1977. "Monopolistic Competition and Optimum Product Diversity," American Economic Review, American Economic Association, vol. 67(3), pages 297-308, June.
  4. Tollison, Robert D, 1982. "Rent Seeking: A Survey," Kyklos, Wiley Blackwell, vol. 35(4), pages 575-602.
  5. Menahem E. Yaari, 1965. "Uncertain Lifetime, Life Insurance, and the Theory of the Consumer," Review of Economic Studies, Oxford University Press, vol. 32(2), pages 137-150.
  6. Charles Engel & Kenneth Kletzer, 1988. "Tariffs and Saving in a Model with New Families," NBER Working Papers 2521, National Bureau of Economic Research, Inc.
  7. Frenkel, Jacob A & Razin, Assaf, 1986. "Fiscal Policies in the World Economy," Journal of Political Economy, University of Chicago Press, vol. 94(3), pages 564-594, June.
  8. Krueger, Anne O, 1974. "The Political Economy of the Rent-Seeking Society," American Economic Review, American Economic Association, vol. 64(3), pages 291-303, June.
  9. McCormick, Robert E & Shughart, William F, II & Tollison, Robert D, 1984. "The Disinterest in Deregulation," American Economic Review, American Economic Association, vol. 74(5), pages 1075-1079, December.
  10. Blanchard, Olivier J, 1985. "Debt, Deficits, and Finite Horizons," Journal of Political Economy, University of Chicago Press, vol. 93(2), pages 223-247, April.
  11. John Laitner, 1982. "Monopoly and Long-Run Capital Accumulation," Bell Journal of Economics, The RAND Corporation, vol. 13(1), pages 143-157, Spring.
  12. Ronald Findlay & Stanislaw Wellisz, 1982. "Endogenous Tariffs, the Political Economy of Trade Restrictions, and Welfare," NBER Chapters,in: Import Competition and Response, pages 223-244 National Bureau of Economic Research, Inc.
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Cited by:

  1. repec:adr:anecst:y:1999:i:53:p:04 is not listed on IDEAS
  2. 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.
  3. Bertrand Crettez, 1999. "Concurrence à la Cournot, accumulation du capital et bulle," Annals of Economics and Statistics, GENES, issue 53, pages 69-91.

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