Munich Personal RePEc Archive

Financial Development, Capital Flow, and Income Differences between Countries

Kunieda, Takuma (2008): Financial Development, Capital Flow, and Income Differences between Countries.

[img]
Preview
PDF
MPRA_paper_11342.pdf

Download (946kB) | Preview

Abstract

This paper demonstrates with a simple two-country general equilibrium model that the difference in the levels of financial development between countries determines the direction of capital movement and that for some parameter values, if financial markets are integrated internationally, countries with a poorly developed financial sector are never industrialized, while if they had remained closed economies, they would have experienced steady endogenous growth. This result is consistent with a traditional but non-mainstream view of structuralists and gives a theoretical foundation for capital flow regulations which are often imposed by developing countries.

UB_LMU-Logo
MPRA is a RePEc service hosted by
the Munich University Library in Germany.