International asset market, nonconvergence, and endogenous fluctuations

Tomoo Kikuchi*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

9 Citations (Scopus)


We develop an overlapping generations model with re-tradeable paper assets and capital accumulation to analyze the interaction between the real economy and an international asset market. The world consists of two homogeneous countries, which differ only in their initial levels of capital. Consumers who live for two periods transfer wealth over time and across countries by holding international mutual funds which pay stochastic dividends. The optimal portfolio decisions of consumers do not necessarily induce convergence of incomes between the two countries. Moreover, interaction through the asset market induces endogenous fluctuation of capital flows between the rich and the poor country.

Original languageEnglish
Pages (from-to)310-334
Number of pages25
JournalJournal of Economic Theory
Issue number1
Publication statusPublished - 2008 Mar
Externally publishedYes


  • Endogenous cycles
  • Inequality of nations
  • International asset market
  • Two-country model

ASJC Scopus subject areas

  • Economics and Econometrics


Dive into the research topics of 'International asset market, nonconvergence, and endogenous fluctuations'. Together they form a unique fingerprint.

Cite this