Capital flows and income inequality

• 成果类型: Article
• 署名作者: Liu, Zheng; Spiegel, Mark M.; Zhang, Jingyi
• 署名单位: Federal Reserve System - USA; Federal Reserve Bank - San Francisco; Shanghai University of Finance & Economics
• 刊物名称: JOURNAL OF INTERNATIONAL ECONOMICS
• ISSN/ISSBN: 0022-1996
• DOI: 10.1016/j.jinteco.2023.103776
• 发表日期: 2023
• 关键词: capital flows; Income distribution; heterogeneous agents; Capital -skill complementarity; financial frictions; Small open economy

摘要

We document empirical evidence that surges in capital inflows (outflows) raise (reduce) income inequality. We study the mechanism through which changes in capital flows and capital account policies can influence income distributions in a small open economy model. Our model features heterogeneous agents and financial frictions, with banks intermediating between household savings and entrepreneur investment. Inflow surges disproportionately raise entrepreneur income, exacerbating inequality, while increases in outflows boost the share of household income, alleviating inequality. Under capital-skill complementarity, capital account liberalization that induces net capital inflows raises both the skill wage premium and overall income inequality. These predictions are in line with our empirical evidence.Published by Elsevier B.V.