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Preference Structures, Wealth Distribution, and Patterns of Trade in a Global Economy

Author

Listed:
  • Yasuhiro Nakamoto

    (Faculty of Informatics, Kansai University)

  • Kazuo Mino

    (Institute of Economic Research, Kyoto University)

  • Yunfang Hu

    (Graduate School of Economics, Kobe University)

Abstract

This study integrates the dynamic 2x2x2 Hechscher-Ohlin model with the neoclassical growth model, considering heterogeneous households, to explore the relationship between preference structures, wealth distribution, and international trade in a unified setting. We demonstrate that if households have homothetic utility functions, the long-run trade pattern depends solely on the initial distribution of capital between two countries. Conversely, if preferences are non-homothetic, the initial distribution of wealth among households also influences long-run trade patterns. Numerical examples further examine the wealth distribution in each country, showing that the initially poor can catch up with the initially rich.

Suggested Citation

  • Yasuhiro Nakamoto & Kazuo Mino & Yunfang Hu, 2024. "Preference Structures, Wealth Distribution, and Patterns of Trade in a Global Economy," KIER Working Papers 1105, Kyoto University, Institute of Economic Research.
    • Handle: RePEc:kyo:wpaper:1105
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    References listed on IDEAS

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    More about this item

    Keywords

    Dynamic Hecksher-Ohlin model; Non-homothetic preference; Heterogeneous households; Wealth distribution;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • E20 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - General (includes Measurement and Data)
    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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