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GTAP Resources: Resource Display

GTAP Resource #7221

"An investment determination mechanism with segmented capital markets"
by Cui, Hao (David) and Zuzana Smeets Kristkova


Abstract
In the standard GTAP model, regional investment is allocated via a global bank under which either the expected rate of return is equalized across regions or the net investment growth rate is equalized across regions. In a typical CGE baseline with long term recursive dynamics, this paper shows that this global bank approach can lead to unrealistic investment growth and volatile current accounts (i.e., trade balances) projections even in major economies. To tackle these issues, this paper introduces a segmented capital markets approach where regional investment comes from not only the global/international bank but also domestic banks such that regional investment and savings are well connected. The paper shows that the proposed approach leads to well-controlled investment growth and trade balance developments.


Resource Details (Export Citation) GTAP Keywords
Category: 2024 Conference Paper
Status: Not published
By/In: Presented during the 27th Annual Conference on Global Economic Analysis (Fort Collins, Colorado, USA)
Date: 2024
Version: v1
Created: Cui, H. (4/13/2024)
Updated: Cui, H. (4/16/2024)
Visits: 51
- Model extension/development
- Partial and general equilibrium models
- Not Applicable


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