Explaining structural change towards and within the financial sector

Josef Falkinger, Sabrina Studer and Yingnan Zhao ()

No 206, ECON - Working Papers from Department of Economics - University of Zurich

Abstract: This paper presents a 3x3 general equilibrium model of an OLG-economy with technological uncertainty, heterogeneous agents and quasi-homothetic preferences to analyze structural change between the real and the financial sector as well as within the financial sector. Besides the consumption and investment good two types of financial services are produced. The three factors of production are: Capital, skilled and unskilled labor. Financial services are needed for transforming savings into future consumption possibilities. The financial market provides deposits and an incomplete set of securities. Payoffs of assets are determined by the future profitability of the technolo- gies in which they are invested. We show the channels through which structural change and inequality reinforce each other and show how they simultaneously emerge from rising per-capita income, an increase in skill supply and technical change.

Keywords: Structural change; financialization; quasi-homothetic portfolio decision; inequality (search for similar items in EconPapers)
JEL-codes: D90 J31 O16 (search for similar items in EconPapers)
Date: 2015-10
New Economics Papers: this item is included in nep-dge
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Related works:
Working Paper: Explaining structural changes towards and within the financial sector (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:zur:econwp:206

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