Endogenous inequality and fluctuations in a two-country model

Tomoo Kikuchi and John Stachurski

Journal of Economic Theory, 2009, vol. 144, issue 4, pages 1560-1571

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.

Keywords: Credit; market; imperfection; Endogenous; cycles; Symmetry-breaking; Two-country; model (search for similar items in EconPapers)
Date: 2009

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Persistent link: http://EconPapers.repec.org/RePEc:eee:jetheo:v:144:y:2009:i:4:p:1560-1571

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