Endogenous inequality and fluctuations in a two-country model

Tomoo Kikuchi, John Stachurski

Research output: Contribution to journalArticlepeer-review

10 Citations (Scopus)

Abstract

We study a two-country version of Matsuyama's [K. Matsuyama, Financial market globalization, symmetry-breaking, and endogenous inequality of nations, Econometrica 72 (2004) 853-884] world economy model. As in Matsuyama's model, symmetry-breaking can be observed, and symmetry-breaking generates endogenously determined levels of inequality. In addition, we show that when the countries differ in population size, their interaction through credit markets may lead to persistent endogenous fluctuations.

Original languageEnglish
Pages (from-to)1560-1571
Number of pages12
JournalJournal of Economic Theory
Volume144
Issue number4
DOIs
Publication statusPublished - 2009 Jul
Externally publishedYes

Keywords

  • Credit market imperfection
  • Endogenous cycles
  • Symmetry-breaking
  • Two-country model

ASJC Scopus subject areas

  • Economics and Econometrics

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