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| Author: | Evans, P. Karras, G. |
| Title: | International integration of capital markets and the cross-country divergence of per capita consumption |
| Journal: | Journal of International Money and Finance
1997 : OCT, Vol. 16:5, p. 681-697 |
| Index terms: | CAPITAL MARKETS CONSUMPTION DEVELOPED ECONOMIES |
| Language: | eng |
| Abstract: | This paper proposes a new way of investigating the international integration of capital markets. In a stochastic neoclassical growth model with representative agents, perfect international capital markets result in the divergence of per capita consumption across countries. If instead the countries lack representative-agent economies with unrestricted access to international capital markets, per capita consumption does not diverge. Divergence of per capita consumption cannot be rejected across the countries most likely to have had unrestricted access to international capital markets: Canada, the UK and the US. By contrast, divergence of per capita consumption is strongly rejected across nineteen other industrial countries. |
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