International Integration in Heterogeneous Agent Economies with Capital Market Imperfections

• Antragsteller: Professor Dr. Maik Heinemann
• Fachliche Zuordnung: Wirtschaftstheorie
• Förderung: Förderung von 2012 bis 2016
• Projektkennung: Deutsche Forschungsgemeinschaft (DFG) - Projektnummer 201593830

Regardless of the substantial amount of research that has been undertaken in the field of heterogeneous– agent models and incomplete markets throughout the last two decades, almost no attention was paid to open–economy issues. The restriction of focus to closed–economy settings constitutes a considerable shortcoming of this approach, given the empirical significance of the subject in todays highly integrated world economy. Our research proposal aims at filling this gap in the existing literature. We intend to explore to what extent the observed patterns of international capital flows and international trade can explained in models which emphasize the importance of incomplete markets preventing agents from insuring against idiosyncratic risk. Building on the little literature available in the context of open–economy Aiyagari/Huggett– type approaches, the proposed research project intends to conduct a comprehensive analysis of several aspects in this field. Of major interest is how international integration affects the macroeconomy regarding domestic output, equilibrium prices, the distribution of income and wealth within and between countries, the direction and magnitude of capital and trade flows in economies, where agents are subject to borrowing constraints and individual risk. The analysis will cover aspects of entrepreneurship and financing constraints as well as international trade in small–open economies and multi–country models. We are interested in the welfare effects of international integration to identify those members of society who are most likely to benefit or to suffer from from international market liberalization.

• DFG-Verfahren: Schwerpunktprogramme
• Teilprojekt zu: SPP 1578: Finanzmärkte und Gesamtwirtschaftliche Entwicklung