Search results for " Multiple Equilibria"
showing 2 items of 2 documents
World Interest Rates, Inequality and Growth: an Empirical Analysis of the Galor-Zeira Model
2014
Following Galor and Zeira (1993), we study the effect of the world interest rate on inequality and growth for the period 1985-2005, characterized by falling world interest rates and cross-country income polarization. We argue that the two phenomena are related on th e basis of the following findings, which are in accordance with the predictions of the Galor and Zeira model: 1) a reduction of the world inter est rates increases inequality in rich countries and decreases inequ ality in poor countries; 2) inequality has a negative (and significant) eff ect on human capital accumulation in rich countries and a positive (b ut mostly not significant) effect in poor countries; 3) human capital po …
Evaluating currency crises: the case of the European monetary system
2007
In this paper we examine the nature of currency crises. We ascertain whether the currency crises of the European Monetary System (EMS) were based either on fundamentals, or on self-fulfilling market expectations driven by extrinsic uncertainty. In particular, we extend previous work of Jeanne and Masson (J Int Econ 50:327–350, 2000) regarding the evaluation of currency crisis. We contribute to the existing literature proposing the use of Markov regime-switching with time-varying transition probability model. Our empirical results suggest that the currency crises of the EMS were not due only to market expectations driven by external uncertainty, or ‘sunspots’, but also to fundamental variabl…