Please use this identifier to cite or link to this item: https://doi.org/10.1016/j.jet.2007.05.008
Title: International asset market, nonconvergence, and endogenous fluctuations
Authors: Kikuchi, T. 
Keywords: Endogenous cycles
Inequality of nations
International asset market
Two-country model
Issue Date: 2008
Citation: Kikuchi, T. (2008). International asset market, nonconvergence, and endogenous fluctuations. Journal of Economic Theory 139 (1) : 310-334. ScholarBank@NUS Repository. https://doi.org/10.1016/j.jet.2007.05.008
Abstract: We develop an overlapping generations model with re-tradeable paper assets and capital accumulation to analyze the interaction between the real economy and an international asset market. The world consists of two homogeneous countries, which differ only in their initial levels of capital. Consumers who live for two periods transfer wealth over time and across countries by holding international mutual funds which pay stochastic dividends. The optimal portfolio decisions of consumers do not necessarily induce convergence of incomes between the two countries. Moreover, interaction through the asset market induces endogenous fluctuation of capital flows between the rich and the poor country.©2007 Elsevier Inc. All rights reserved.
Source Title: Journal of Economic Theory
URI: http://scholarbank.nus.edu.sg/handle/10635/20017
ISSN: 00220531
10957235
DOI: 10.1016/j.jet.2007.05.008
Appears in Collections:Staff Publications

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