Volatile capital flows and financial integration: The role of moral hazard

Tomoo Kikuchi*, John Stachurski, George Vachadze

*この研究の対応する著者

研究成果: Article査読

2 被引用数 (Scopus)

抄録

We study a model in which income and capital flows between countries are jointly determined in a world economy with integrated financial markets. In a setting that combines risky entrepreneurial activity with moral hazard, we find that a shift from autarky to financial integration leads to boom-bust cycles in capital flows, output and consumption. Moral hazard causes cycles because financial intermediaries incentivize effort by insisting entrepreneurs take an equity share in their own projects. The size of this stake rises with wealth, discouraging entrepreneurship and inhibiting capital formation. The reverse is true when wealth falls, generating cycles.

本文言語English
ページ(範囲)170-192
ページ数23
ジャーナルJournal of Economic Theory
176
DOI
出版ステータスPublished - 2018 7月
外部発表はい

ASJC Scopus subject areas

  • 経済学、計量経済学

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