search query: @indexterm International capital market / total: 53
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| Author: | Boyd, J. H. Smith, B. D. |
| Title: | Capital market imperfections, international credit markets, and nonconvergence |
| Journal: | Journal of Economic Theory
1997 : APR, VOL. 73:2, p. 335-364 |
| Index terms: | INTERNATIONAL CAPITAL MARKET CREDIT MARKETS INTERNATIONAL ECONOMICS |
| Language: | eng |
| Abstract: | A two country growth model is considered in this study, with international capital markets. The markets fund capital investments in both countries and operate subject to a costly state verification problem. In each country investors require external finance and also provide some internal, which mitigates the costly state verification problem. Two identical closed economies necessarily converge monotonically to the same steady state output level. Unrestricted international financial trade precludes otherwise identical economies from converging and poor economies are net lenders to rich countries. |
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