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Credit Markets and Stagnation in an Endogenous Growth Model

Author : Mr.Jose De Gregorio

Publisher : International Monetary Fund

Page : 22 pages

File Size : 43,3 MB

Release : 1993-09-01

Category : Business & Economics

ISBN : 1451959087

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Book Description

This paper studies the effects that the inability of individuals to borrow against future income has on economic growth. The model assumes that human capital, which is accumulated through education, is the only factor of production. It is shown that liquidity constraints reduce growth. Further, in the presence of externalities that may induce two equilibria, it is shown that liquidity constraints not only reduce the rate of growth in the high-growth equilibrium, but can also make the low-growth equilibrium more likely to occur.





Credit Markets with Differences in Abilities

Author : Mr.Se-Jik Kim

Publisher : International Monetary Fund

Page : 36 pages

File Size : 13,8 MB

Release : 1994-04-01

Category : Business & Economics

ISBN : 1451972962

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Book Description

This paper addresses the growth, welfare, and distributional effects of credit markets. We construct a general equilibrium model where human capital is the engine of growth and individuals differ in their education abilities. We argue that the existence of credit markets encourages specialization, by which individuals choose during their youth to work or to receive formal education. This specialization unambiguously increases growth and welfare. The model also shows that in economies with high (low) average level of education abilities, the opening of credit markets induces a more disperse (equal) income distribution.



Endogenous Growth and Endogenous Business Cycles in an Overlapping Generations Economy With Credit Market Imperfections

Author : Takuma Kunieda

Publisher :

Page : 42 pages

File Size : 21,82 MB

Release : 2007

Category :

ISBN :

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Book Description

We study the dynamic properties of growth rates in an overlapping generations economy with credit market imperfections, constructing a Schumpeterian growth model. The analysis demonstrates that: (i) two steady-state equilibria arise as is usual in overlapping generations models with outside money and the growth rate of each increases as credit market imperfections are resolved; (ii) if credit market imperfections are severe or soft and if sunspots do not appear, the economy converges monotonically to a stable steady state; and (iii) if credit market imperfections are moderate, deterministic cycles or chaos would arise in equilibrium.



Explaining Economic Growth with Imperfect Credit Markets

Author : Luis Carranza

Publisher : International Monetary Fund

Page : 34 pages

File Size : 40,70 MB

Release : 2000-12

Category : Business & Economics

ISBN :

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Book Description

This paper studies how financial markets and accumulation of financial assets interact with economic growth, change of industry structure, productivity and distribution of wealth across households. To carry out this study, a dynamic general equilibrium model with imperfections in the credit market is developed.



The Role of Credit Markets in a Transition Economy with Incomplete Public Information

Author : Kenneth Kletzer

Publisher : International Monetary Fund

Page : 34 pages

File Size : 48,82 MB

Release : 1996-02

Category : Business & Economics

ISBN :

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Book Description

In this paper we explore some of the informational problems that constrain the development of credit markets in transition economies. We characterize investment patterns under uncertainty and high costs of entry, when agents learn about the ultimate value of enterprises through production in a Bayesian way. Inefficiencies due to the lack of public information reduce the average return to capital. Under asymmetric information, credit would go to activities that can provide enough co-finance. Credit markets may fail to develop for a while if there is not enough individual wealth to complement credit. Once they operate, credit markets may magnify distortions in equity markets, such as those due to spontaneous privatization. An argument for the sequencing of capital market liberalization is provided.





Credit Supply and Productivity Growth

Author : Francesco Manaresi

Publisher : International Monetary Fund

Page : 75 pages

File Size : 34,32 MB

Release : 2019-05-17

Category : Business & Economics

ISBN : 1498315917

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Book Description

We study the impact of bank credit on firm productivity. We exploit a matched firm-bank database covering all the credit relationships of Italian corporations, together with a natural experiment, to measure idiosyncratic supply-side shocks to credit availability and to estimate a production model augmented with financial frictions. We find that a contraction in credit supply causes a reduction of firm TFP growth and also harms IT-adoption, innovation, exporting, and adoption of superior management practices, while a credit expansion has limited impact. Quantitatively, the credit contraction between 2007 and 2009 accounts for about a quarter of observed the decline in TFP.



IMF Working Paper

Author :

Publisher :

Page : 586 pages

File Size : 50,34 MB

Release : 1994

Category : Finance

ISBN :

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Hysteresis and Business Cycles

Author : Ms.Valerie Cerra

Publisher : International Monetary Fund

Page : 50 pages

File Size : 21,83 MB

Release : 2020-05-29

Category : Business & Economics

ISBN : 1513536990

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Book Description

Traditionally, economic growth and business cycles have been treated independently. However, the dependence of GDP levels on its history of shocks, what economists refer to as “hysteresis,” argues for unifying the analysis of growth and cycles. In this paper, we review the recent empirical and theoretical literature that motivate this paradigm shift. The renewed interest in hysteresis has been sparked by the persistence of the Global Financial Crisis and fears of a slow recovery from the Covid-19 crisis. The findings of the recent literature have far-reaching conceptual and policy implications. In recessions, monetary and fiscal policies need to be more active to avoid the permanent scars of a downturn. And in good times, running a high-pressure economy could have permanent positive effects.