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Preference Structure and Volatility in a Financially Integrated World

  • Kazuo Mino

    ()

    (Graduate School of Economics, Osaka University)

This paper investigates a two-country model of capital accumulation with country-specific production externalities. The main concern of our discussion is to explore the presence of equilibrium indeterminacy in an open-economy setting. In contrast to the existing studies on equilibrium indeterminacy in small-open economies, the present paper demonstrates that opening up international trade and financial interactions between two counties does not necessarily enhance the possibility of indeterminacy of equilibrium. It is shown that the results depend heavily upon not only on the degree of external increasing returns but also on the preference structures.

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File URL: http://www2.econ.osaka-u.ac.jp/library/global/dp/0805.pdf
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Paper provided by Osaka University, Graduate School of Economics and Osaka School of International Public Policy (OSIPP) in its series Discussion Papers in Economics and Business with number 08-05.

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Length: 23 pages
Date of creation: Feb 2008
Date of revision:
Handle: RePEc:osk:wpaper:0805
Contact details of provider: Web page: http://www.econ.osaka-u.ac.jp/
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  1. Luis Aguiar-Conraria & Yi Wen, 2005. "Foreign trade and equilibrium indeterminacy," Working Papers 2005-041, Federal Reserve Bank of St. Louis.
  2. Mino, Kazuo, 2008. "Financial integration and volatility in a two-country world," MPRA Paper 16953, University Library of Munich, Germany.
  3. Marianne Baxter & Mario J. Crucini, 1994. "Business Cycles and the Asset Structure of Foreign Trade," NBER Working Papers 4975, National Bureau of Economic Research, Inc.
  4. Koji Shimomura & Kazuo Nishimura, 2001. "Trade and Indeterminacy in a Dynamic General Equilibrium Model," Discussion Paper Series 117, Research Institute for Economics & Business Administration, Kobe University.
  5. Wen, Yi, 2001. "Understanding self-fulfilling rational expectations equilibria in real business cycle models," Journal of Economic Dynamics and Control, Elsevier, vol. 25(8), pages 1221-1240, August.
  6. Pelloni, Alessandra & Waldmann, Robert, 1998. "Stability properties of a growth model," Economics Letters, Elsevier, vol. 61(1), pages 55-60, October.
  7. Nishimura, Kazuo & Shimomura, Koji, 2002. "Indeterminacy in a dynamic small open economy," Journal of Economic Dynamics and Control, Elsevier, vol. 27(2), pages 271-281, December.
  8. Qinglai Meng & Andrés Velasco, 2003. "Indeterminacy in a small open economy with endogenous labor supply," Economic Theory, Springer, vol. 22(3), pages 661-669, October.
  9. Christian Ghiglino & Marielle Olszak-Duquenne, 2004. "On the Impact of Heterogeneity on Indeterminacy," Research Papers by the Institute of Economics and Econometrics, Geneva School of Economics and Management, University of Geneva 2004.09, Institut d'Economie et Econométrie, Université de Genève.
  10. Kazuo Nishimura & Koji Shimomura, 2006. "Indeterminacy in a dynamic two-country model," Economic Theory, Springer, vol. 29(2), pages 307-324, October.
  11. Farmer, Roger E A & Lahiri, Amartya, 2002. "Economic Growth in an Interdependent World Economy," CEPR Discussion Papers 3250, C.E.P.R. Discussion Papers.
  12. Weder, Mark, 2000. "Indeterminacy in a Small Open Economy Ramsey Growth Model," CEPR Discussion Papers 2585, C.E.P.R. Discussion Papers.
  13. Mino, Kazuo, 2001. "Indeterminacy and Endogenous Growth with Social Constant Returns," Journal of Economic Theory, Elsevier, vol. 97(1), pages 203-222, March.
  14. Roger E. A. Farmer & Amartya Lahiri, 2005. "A Two-Country Model of Endogenous Growth," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 8(1), pages 68-88, January.
  15. Meng, Qinglai & Velasco, Andres, 2004. "Market imperfections and the instability of open economies," Journal of International Economics, Elsevier, vol. 64(2), pages 503-519, December.
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