Preference Structures, Wealth Distribution, and Patterns of Trade in a Global Economy

Yasuhiro Nakamoto (), Kazuo Mino () and Yunfang Hu ()
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Yasuhiro Nakamoto: Faculty of Informatics, Kansai University
Kazuo Mino: Institute of Economic Research, Kyoto University
Yunfang Hu: Graduate School of Economics, Kobe University

No 1105, KIER Working Papers from Kyoto University, Institute of Economic Research

Abstract: This study integrates the dynamic 2x2x2 Hechscher-Ohlin model with the neoclassical growth model, considering heterogeneous households, to explore the relationship between preference structures, wealth distribution, and international trade in a unified setting. We demonstrate that if households have homothetic utility functions, the long-run trade pattern depends solely on the initial distribution of capital between two countries. Conversely, if preferences are non-homothetic, the initial distribution of wealth among households also influences long-run trade patterns. Numerical examples further examine the wealth distribution in each country, showing that the initially poor can catch up with the initially rich.

Keywords: Dynamic Hecksher-Ohlin model; Non-homothetic preference; Heterogeneous households; Wealth distribution (search for similar items in EconPapers)
JEL-codes: D31 E20 F11 F43 O41 (search for similar items in EconPapers)
Pages: 37 pages
Date: 2024-06
New Economics Papers: this item is included in nep-gro, nep-int, nep-opm and nep-upt
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Persistent link: https://EconPapers.repec.org/RePEc:kyo:wpaper:1105

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