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Identifier to cite or link to this item: https://hdl.handle.net/10086/18636

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Title
Endogenous Ranking and Equilibrium Lorenz Curve Across (ex-ante) Identical Countries
Creator
Creator Name
Matsuyama, Kiminori Matsuyama, Kiminori
松山, 公紀 松山, 公紀
Affiliation
Affiliation Name
Hitotsubashi University
Editor
Contributor Name
社会科学の高度統計・実証分析拠点構築 = Research Unit for Statistical and Empirical Analysis in Social Sciences
Key Word
Endogenous Comparative Advantage
Endogenous Inequality
Globalization and Inequality
Dornbusch-Fischer-Samuelson model
Dixit-Stiglitz model of monopolistic competition
Symmetry-Breaking
Lorenz-dominant shifts
Log-submodularity
Power-law distributions
Abstract
This paper considers a model of the world economy with a finite number of ex-ante identical countries and a continuum of tradeable goods. Productivity differences across countries arise endogenously through free entry to the local differentiated producer service sector in each country. It is shown that, in any stable equilibrium, the countries sort themselves into specializing in different sets of tradeable goods and that a strict ranking of countries in income, TFP, and the capital-labor ratio emerge endogenously. The equilibrium Lorenz curve is characterized by a second-order nonlinear difference equation with the two terminal conditions. As the number of countries increases, this equation converges to a differential equation whose unique solution can be solved analytically and depends on a few parameters in a tractable manner. This enables us to show when the equilibrium distribution obeys a power-law and how various forms of globalization affect inequality among countries and to study the welfare effects of trade.
Description
Last revised: 7/9/2010 4:10 PM
Some of the results here have previously been circulated as a memo entitled “Emergent International Economic Order”
Publisher
Institute of Economic Research, Hitotsubashi University
Issued Date
2010-08
Language
English(eng)
Resource Type
technical report
Version Type
VoR
Is Part OfRelation -
Related Title
Global COE Hi-Stat Discussion Paper Series ; No. 148
Relation
Related Identifier
URI
  http://gcoe.ier.hit-u.ac.jp/english/index.html
Number of Pages
32
Sponsorship
グローバルCOEプログラム = Global COE Program
Appears in Collections
Global COE Hi-Stat Discussion Paper Series
URL
https://hdl.handle.net/10086/18636