Kikuchi, TomooStachurski, John2015-12-070022-0531http://hdl.handle.net/1885/28250We study a two-country version of Matsuyama's [K. Matsuyama, Financial market globalization, symmetry-breaking, and endogenous inequality of nations, Econometrica 72 (2004) 853-884] world economy model. As in Matsuyama's model, symmetry-breaking can be observed, and symmetry-breaking generates endogenously determined levels of inequality. In addition, we show that when the countries differ in population size, their interaction through credit markets may lead to persistent endogenous fluctuations.Keywords: Credit market imperfection; Endogenous cycles; Symmetry-breaking; Two-country model200910.1016/j.jet.2009.01.0012016-02-24