National and International Inequalities in Income and Wealth in a Global Growth with Free Trade and National Inflation Policies
The purpose of this paper is to study global monetary economic growth with heterogeneous households under free trade. The paper examines dynamics of global and national wealth and income distribution in association with monetary economic growth within an integrated framework. Money is introduc...
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| Main Author: | |
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| Format: | Article |
| Language: | English |
| Published: |
Nicolae Titulescu University
2014-05-01
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| Series: | Global Economic Observer |
| Subjects: | |
| Online Access: | http://www.globeco.ro/wp-content/uploads/vol/split/vol_2_no_1/geo_2014_vol2_no1_art_003.pdf |
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| Summary: | The purpose of this paper is to study global monetary economic growth with heterogeneous
households under free trade. The paper examines dynamics of global and national wealth and
income distribution in association with monetary economic growth within an integrated framework.
Money is introduced via the cash-in-advance (CIA) approach. We show that the dynamics of the
world economy (with any number of countries) is described by a set of differential equations. We
simulate equilibrium of the global economy with three countries and two types of households in
each country. We also demonstrate effects of changes in technology and inflation policy. Our model
demonstrates, as Grier and Grier (2007) empirically show, that the global economy exhibits
absolute divergence in output levels if some determinants of steady state income are different. The
study shows that as one country increases its inflation policy, the equilibrium values of the global
output, consumption level and physical wealth are enhanced, and the rate of interest is lowered.
The country which raises its inflation policy benefits in every aspect, but the other countries suffer
in some aspects and benefit in others. |
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| ISSN: | 2343-9742 2343-9750 |