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Monopoly Wealth and International Debt

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  • Jonathan Eaton

Abstract

When rents generated by government policies are perceived as permanent, the rights to earn them may be capitalized as assets that form a component of nonhuman wealth. The existence of such assets raises international indebtedness, while shifts in policy that increase or reduce the importance of such rents can generate movements in the current account that are correlated with the real exchange rate. Because the elimination of policies that generate rents imposes a capital loss that Is born entirely by generations currently alive, while the benefit of the removal of a distortion is shared between those alive and unborn generations, a possibility is that such a reform can reduce the expected lifetime welfare of everyone alive. If monopoly exists in the provision of nontraded goods then there may be several steady states that can be Pareto ranked.

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  • Jonathan Eaton, 1988. "Monopoly Wealth and International Debt," NBER Working Papers 2485, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:2485
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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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