TY  - JOUR
AU  - Eaton,Jonathan
TI  - Monopoly Wealth and International Debt
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 2485
PY  - 1989
Y2  - May 1989
UR  - http://www.nber.org/papers/w2485
L1  - http://www.nber.org/papers/w2485.pdf
N1  - Author contact info:
Jonathan Eaton
Department of Economics
Penn State University
608 Kern Graduate Building
University Park, PA 16802-3306
Tel: (814) 865 - 8871
Fax: (814) 863 - 4775
E-Mail: jxe22@psu.edu
AB  - 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.
ER  -