Publication Type
Working Paper
Version
publishedVersion
Publication Date
12-2013
Abstract
This note proposes a simple, more precise, necessary condition for symmetry breaking in Matsuyama (Financial Market Globalization, Symmetry-Breaking, and Endogenous Inequality of Nations, Econometrica, 2004 ), i.e., the positive interest rate response to income changes, which essentially arises from the assumptions of financial frictions and minimum investment size requirement of individual projects. This condition also holds under the more general settings. Thus, this note o ers an empirically testable hypothesis, i.e., Matsuyama's symmetry breaking is more likely, if the interest rate response to income changes is positive and sufficiently large.
Keywords
Financial frictions, Financial market globalization, Minimum investment Size requirement, Symmetry breaking
Discipline
Finance | Macroeconomics
Research Areas
Macroeconomics
First Page
1
Last Page
28
Publisher
SMU Economics and Statistics Working Paper Series, No. 09-2013
City or Country
Singapore
Citation
ZHANG, Haiping.
Minimum Investment Requirement, Financial Integration and Economic (In)stability: A Refinement to Matsuyama (2004). (2013). 1-28.
Available at: https://ink.library.smu.edu.sg/soe_research/1519
Copyright Owner and License
Authors
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.