Speaker: Prof. Sugata Marjit, Centre for Studies in Social Sciences, Calcutta
Date & Hour: 09 September 2019, 2:30 pm
Venue: Seminar Hall 1
Title: Wealth Distribution, Inequality and Capital flows – Role of Credit Market Imperfection
Abstract: This paper explores the impact of wealth distribution and inequality on pattern of trade and capital flows with credit rationing. More egalitarian societies may aggravate the impact ofcredit rationing leading to import of credit or capital intensive good. Low price of capital in autarky may reflect lack of demand for credit due to scarcity of entrepreneurs and not due to capital abundance and eventually may lead to capital outflow from a capital scarce country. This is a different way of echoing the sentiment of the well-known “Lucas Paradox” which suggests that capital might flow from the poor to the rich countries. We also show the possibility of trade and capital flow being complements and not substitutes, as is usual in standard models.