Inequality, Structure of Production and International Trade – The Role of Credit Market Imperfection

21 Pages Posted: 21 Feb 2017

See all articles by Hamid Beladi

Hamid Beladi

University of Texas at San Antonio - College of Business - Department of Economics

Sugata Marjit

Centre for Studies in Social Sciences, Calcutta; Indian Institute of Foreign Trade; City University of Hong Kong (CityU) - Department of Economics & Finance

Suryaprakash Misra

NALSAR University of Law

Date Written: February 7, 2017

Abstract

Credit rationing in the presence of asset inequality affects production and trade pattern in this paper, but not in the conventional way. A Ricardian general equilibrium framework with heterogeneous levels of asset ownership is developed to show that more equal asset distribution may contract the output of the credit intensive sector as redistribution to the bottom of the ladder fails to promote entrepreneurs. However, the same in favor of the middle of the ladder may do the opposite. We point out the possibility that an economy with relatively equal distribution of asset ownership may import capital or credit intensive good and also export capital, unlike in a conventional HOS model.

Keywords: Credit, Inequality, Egalitarian Distribution, Trade

JEL Classification: F120

Suggested Citation

Beladi, Hamid and Marjit, Sugata and Marjit, Sugata and Misra, Suryaprakash, Inequality, Structure of Production and International Trade – The Role of Credit Market Imperfection (February 7, 2017). CESifo Working Paper Series No. 6307, Available at SSRN: https://ssrn.com/abstract=2920675 or http://dx.doi.org/10.2139/ssrn.2920675

Hamid Beladi

University of Texas at San Antonio - College of Business - Department of Economics ( email )

One UTSA Circle
P.O. Box 5636
San Antonio, TX 78249
United States
210-458-7038 (Phone)
210-458-7040 (Fax)

Sugata Marjit (Contact Author)

Centre for Studies in Social Sciences, Calcutta ( email )

R 1, B.P. Township
Kolkata, West Bengal, India
Kolkata, West Bengal 700094
India

Indian Institute of Foreign Trade ( email )

New Delhi
QUTUB INSTITUTIONAL AREA
NEW DELHI, 110016
India

City University of Hong Kong (CityU) - Department of Economics & Finance ( email )

83 Tat Chee Avenue
Kowloon
Hong Kong

Suryaprakash Misra

NALSAR University of Law ( email )

Justice City, Shameerpet
R.R. District -500078
Hyderabad, Andhra Pradesh 500078
India

HOME PAGE: http://nalsar.ac.in/faculty/sp%20misra%20-%20profile.html

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