NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Monopoly Wealth and International Debt

Jonathan Eaton

NBER Working Paper No. 2485 (Also Reprint No. r1186)
Issued in 1988
NBER Program(s):   ITI   IFM

When rents generated by government policies are perceived as permanent, the rights to earn them may be capitalized as assets that form a component of nonhuman wealth. The existence of such assets raises international indebtedness, while shifts in policy that increase or reduce the importance of such rents can generate movements in the current account that are correlated with the real exchange rate. Because the elimination of policies that generate rents imposes a capital loss that Is born entirely by generations currently alive, while the benefit of the removal of a distortion is shared between those alive and unborn generations, a possibility is that such a reform can reduce the expected lifetime welfare of everyone alive. If monopoly exists in the provision of nontraded goods then there may be several steady states that can be Pareto ranked.

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Document Object Identifier (DOI): 10.3386/w2485

Published: Eaton, Jonathan. "Monopoly Wealth and International Debt," International Economic Review, Vol. 30, No. 1, pp. 33-48, (February 1989). citation courtesy of

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