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Overview of General Equilibrium Models with Imperfect Financial Markets and the Accumulation of Human Capital

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  • Angelina Shpilevaya

    (RANEPA)

Abstract

The imposition of sanctions on the Russian economy, the emergence of numerous restrictions on financial markets, and the termination of cooperation with international organisations have raised the question of stimulating economic growth through domestic factors, including human capital. General equilibrium models can be used to analyse the consequences of stimulating the accumulation of human capital. One of the most important aspects of such models is the presence of credit constraints. Under conditions of risk, uncertainty, imperfect information, and credit and insurance markets, opportunities to accumulate human capital are limited by household wealth, which can result in low economic growth, reproduction of the inequality across the generations, and a Pareto-inferior equilibrium. State policy can contribute to the mitigation of existing constraints if the capital market is imperfect or does not exist at all.

Suggested Citation

  • Angelina Shpilevaya, 2022. "Overview of General Equilibrium Models with Imperfect Financial Markets and the Accumulation of Human Capital," Russian Journal of Money and Finance, Bank of Russia, vol. 81(3), pages 54-71, September.
    • Handle: RePEc:bkr:journl:v:81:y:2022:i:3:p:54-71
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    References listed on IDEAS

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    More about this item

    Keywords

    general equilibrium model; education; human capital; economic growth; credit constraints; imperfect financial market;
    All these keywords.

    JEL classification:

    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
    • H81 - Public Economics - - Miscellaneous Issues - - - Governmental Loans; Loan Guarantees; Credits; Grants; Bailouts
    • I24 - Health, Education, and Welfare - - Education - - - Education and Inequality
    • I25 - Health, Education, and Welfare - - Education - - - Education and Economic Development

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