Specializations, financial constraints, and income distribution
説明
We investigate how financial frictions affect across- and within-country income distributions by using a three-country dynamic general equilibrium model. In our model, the first and second countries specialize in producing (country-specific) intermediate goods and face financial constraints. The third country produces the final goods by using its own labor and intermediate goods purchased from the first and second countries. The financial markets of these countries are perfectly separated from each other, and the interest rates differ across countries. Our finding is that if the elasticity of substitution between the two intermediate goods is sufficiently high, the relaxation of financial constraints in the first (second) country decreases the second (first) country's income, whereas if the elasticity of substitution is sufficiently low, the relaxation of financial constraints in the first (second) country increases the second (first) country's income. We also find that the income inequality across the three countries is widened by the further relaxation of financial constraints in the country with higher financial development, regardless of the ranking of the per capita income between the first and second countries. Furthermore, the income inequality within the first or second country is reduced as the financial constraints in that country are relaxed.
収録刊行物
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- International Review of Economics & Finance
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International Review of Economics & Finance 56 3-14, 2018-07
Elsevier
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詳細情報 詳細情報について
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- CRID
- 1050575520346755968
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- NII論文ID
- 120006576466
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- ISSN
- 18738036
- 10590560
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- HANDLE
- 20.500.14094/90005624
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- 本文言語コード
- en
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- 資料種別
- journal article
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- データソース種別
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