Authors:	Harms, Philipp Hoffmann, Mathias Kohl, Miriam Krahnke, Tobias
Title:	Inequality and the structure of countries’ external liabilities
Online publication date:	28-Aug-2023
Year of first publication:	2023
Language:	english
Abstract:	In this paper, we present empirical evidence that higher income inequality is associated with a greater equity share in countries’ external liabilities, and we develop a theoretical model that can explain this observation: In a small open economy with traded and non-traded goods, entry barriers depress entrepreneurial activity in non-traded industries and raise income inequality. The small number of domestic non-traded goods firms leaves room for foreign firms to operate on the domestic market, and it reduces external borrowing. The model thus suggests that barriers to entrepreneurial activity raise both inequality and the equity share in foreign liabilities. Our empirical results lend some support to this conjecture.
DDC:	330 Wirtschaft 330 Economics
Institution:	Johannes Gutenberg-Universität Mainz
Department:	FB 03 Rechts- und Wirtschaftswissenschaften
Place:	Mainz
ROR:	https://ror.org/023b0x485
DOI:	http://doi.org/10.25358/openscience-9466
Version:	Published version
Publication type:	Zeitschriftenaufsatz
License:	CC BY
Information on rights of use:	https://creativecommons.org/licenses/by/4.0/
Journal:	Review of world economics Version of Record (VoR)
Publisher:	Springer
Publisher place:	Heidelberg
Issue date:	2023
ISSN:	1610-2886
Publisher DOI:	10.1007/s10290-023-00499-0
Appears in collections:	DFG-491381577-H