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讨论稿No. E2012004: Manufacturing-Finance Comparative Advantage and Global Imbalances

发布日期:2012-09-27 10:50    来源:北京大学国家发展研究院

Manufacturing-Finance Comparative Advantage and Global Imbalances

 

Rui Mao and Yang Yao[1]

 

No. E2012004    October 25, 2012

 

Abstract Treating finance as a tradable service, this paper examines how global current account imbalances can emerge as a result of the Ricardian comparative advantage in finance and manufacturing. The financial sector screens borrowers to limit its risk exposure when it invests in manufacturing firms born with heterogeneous risks. As a result, a country with a relatively higher productivity in the financial sector tends to specialize in providing financial services to both domestic and foreign firms. In a dynamic growth model, we explicitly show that this country tends to persistently run current account deficits. In contrast, a country with the manufacturing comparative advantage tends to persistently run current account surpluses. The scale of global imbalances increases as the comparative advantage gets stronger. Our empirical tests with panel data of OECD countries provide consistent and robust supports to these theoretical claims.

Keywords Manufacturing-finance comparative advantage, global imbalances, international division, credit risk screening.

JEL Classification E22, F21, F32, F36, F41, G21

No. E2012004

 

[1] Rui Mao (corresponding author) and Yang Yao: China Center for Economic Research, National School of Development, Peking University, China, 100871. E-mail addresses: rmao@pku.edu.cn (R. Mao), yyao@ccer.pku.edu.cn (Y. Yao). Tel.: +86 10 6274 1543 (R. Mao), +86 10 6275 3103 (Y. Yao). We thank Jianwei Xu for his contribution to an early version of the paper. We are grateful to Charles Engel, Douglas Gale, Meixin Guo, Daxing He, Jiandong Ju, Lixing Li, Thomas Philippon, and participants of the CCER Development Economics Workshop, Tsinghua International Economics Workshop, and the 4th IEFS Conference for their constructive comments.