IDEAS home Printed from https://ideas.repec.org/a/eee/ecolet/v127y2015icp20-23.html
   My bibliography  Save this article

A simple model of endogenous growth with financial frictions and firm heterogeneity

Author

Listed:
  • Mino, Kazuo

Abstract

This paper constructs a simple model of endogenous growth with financial frictions and firm heterogeneity. In the presence of financial constraints and heterogeneity in production efficiency of firms, the firms whose efficiency exceeds the cutoff level produce and the entrepreneurs who own those firms become borrowers. We show that even if production technology of each firm has an Ak property, the aggregate economy has transition dynamics and that the balanced growth rate depends on the aggregate distribution of wealth between rentiers and entrepreneurs.

Suggested Citation

  • Mino, Kazuo, 2015. "A simple model of endogenous growth with financial frictions and firm heterogeneity," Economics Letters, Elsevier, vol. 127(C), pages 20-23.
    • Handle: RePEc:eee:ecolet:v:127:y:2015:i:c:p:20-23
    DOI: 10.1016/j.econlet.2014.12.022
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0165176514004832
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.econlet.2014.12.022?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Oleg Itskhoki & Benjamin Moll, 2019. "Optimal Development Policies With Financial Frictions," Econometrica, Econometric Society, vol. 87(1), pages 139-173, January.
    2. Nir Jaimovich & Sergio Rebelo, 2017. "Nonlinear Effects of Taxation on Growth," Journal of Political Economy, University of Chicago Press, vol. 125(1), pages 265-291.
    3. repec:fip:fedreq:y:2011:i:3q:p:209-254:n:vol.97no.3 is not listed on IDEAS
    4. Benjamin Moll, 2014. "Productivity Losses from Financial Frictions: Can Self-Financing Undo Capital Misallocation?," American Economic Review, American Economic Association, vol. 104(10), pages 3186-3221, October.
    5. Jianjun Miao & Pengfei Wang, 2012. "Bubbles and Total Factor Productivity," American Economic Review, American Economic Association, vol. 102(3), pages 82-87, May.
    6. Vincenzo Quadrini, 2011. "Financial frictions in macroeconomic fluctations," Economic Quarterly, Federal Reserve Bank of Richmond, vol. 97(3Q), pages 209-254.
    7. Zheng Liu & Pengfei Wang, 2014. "Credit Constraints and Self-Fulfilling Business Cycles," American Economic Journal: Macroeconomics, American Economic Association, vol. 6(1), pages 32-69, January.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Kazuo Mino, 2016. "Fiscal Policy in a Growing Economy with Financial Frictions and Firm Heterogeneity," The Japanese Economic Review, Springer, vol. 67(1), pages 3-30, March.
    2. Quoc Hung Nguyen, 2019. "Growth Model with Financial Deepening and Productivity Heterogeneity," The Japanese Economic Review, Springer, vol. 70(1), pages 123-140, March.
    3. Nguyen Quoc Hung, 2020. "Financial deepening in a two-sector endogenous growth model with productivity heterogeneity," The B.E. Journal of Macroeconomics, De Gruyter, vol. 20(1), pages 1-19, January.
    4. Tsuboi, Mizuki, 2019. "Resource scarcity, technological progress, and stochastic growth," Economic Modelling, Elsevier, vol. 81(C), pages 73-88.
    5. Atsushi Miyake & Kazunobu Muro, 2022. "Credit market imperfection and goods market deregulation in OLG model," Review of Development Economics, Wiley Blackwell, vol. 26(4), pages 2436-2453, November.
    6. Giovannetti, Andrea, 2021. "The anatomy of buyer–seller dynamics in decentralized markets," International Review of Financial Analysis, Elsevier, vol. 77(C).
    7. Maebayashi, Noritaka, 2024. "Sustainability of public debt, investment subsidies, and endogenous growth with heterogeneous firms and financial frictions," MPRA Paper 120884, University Library of Munich, Germany.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Kazuo Mino, 2016. "Fiscal Policy in a Growing Economy with Financial Frictions and Firm Heterogeneity," The Japanese Economic Review, Japanese Economic Association, vol. 67(1), pages 3-30, March.
    2. Macnamara, Patrick & Pidkuyko, Myroslav & Rossi, Raffaele, 2024. "Marginal tax rates and income in the long run: Evidence from a structural estimation," Journal of Monetary Economics, Elsevier, vol. 142(C).
    3. Sylvain Catherine & Thomas Chaney & Zongbo Huang & David Sraer & David Thesmar, 2022. "Quantifying Reduced‐Form Evidence on Collateral Constraints," Journal of Finance, American Finance Association, vol. 77(4), pages 2143-2181, August.
    4. Sergio Ocampo & Juan Herreño, 2023. "The Macroeconomic Consequences of Subsistence Self-Employment," University of Western Ontario, Departmental Research Report Series 20231, University of Western Ontario, Department of Economics.
    5. Tiago Cavalcanti & Bruno Martins & Cezar Santos & Joseph Kaboski, 2018. "Dispersion in Financing Costs and Development," 2018 Meeting Papers 426, Society for Economic Dynamics.
    6. Stephan Heblich & Stephen J. Redding & Hans-Joachim Voth, 2022. "Slavery and the British Industrial Revolution," CEP Discussion Papers dp1884, Centre for Economic Performance, LSE.
    7. To, Thomas Y. & Navone, Marco & Wu, Eliza, 2018. "Analyst coverage and the quality of corporate investment decisions," Journal of Corporate Finance, Elsevier, vol. 51(C), pages 164-181.
    8. Monacelli, Tommaso & Sala, Luca & Siena, Daniele, 2023. "Real interest rates and productivity in small open economies," Journal of International Economics, Elsevier, vol. 142(C).
    9. Bosi, Stefano & Van, Cuong Le & Pham, Ngoc-Sang, 2018. "Intertemporal equilibrium with heterogeneous agents, endogenous dividends and collateral constraints," Journal of Mathematical Economics, Elsevier, vol. 76(C), pages 1-20.
    10. Hans Gersbach & Jean-Charles Rochet & Martin Scheffel, 2023. "Financial Intermediation, Capital Accumulation, and Crisis Recovery," Review of Finance, European Finance Association, vol. 27(4), pages 1423-1469.
    11. Shaker Akhtekhane, Saeed, 2020. "Impact of entry costs on aggregate productivity: financial development matters," MPRA Paper 115221, University Library of Munich, Germany.
    12. Clain-Chamosset-Yvrard, Lise & Raurich, Xavier & Seegmuller, Thomas, 2024. "Entrepreneurship, growth and productivity with bubbles," Journal of Macroeconomics, Elsevier, vol. 81(C).
    13. Giovannetti, Andrea, 2021. "The anatomy of buyer–seller dynamics in decentralized markets," International Review of Financial Analysis, Elsevier, vol. 77(C).
    14. Dong, Feng & Jia, Yandong & Wang, Siqing, 2022. "Speculative Bubbles and Talent Misallocation," Journal of Economic Dynamics and Control, Elsevier, vol. 141(C).
    15. Ai, Hengjie & Li, Kai & Yang, Fang, 2020. "Financial intermediation and capital reallocation," Journal of Financial Economics, Elsevier, vol. 138(3), pages 663-686.
    16. Julian di Giovanni & Manuel García-Santana & Priit Jeenas & Enrique Moral-Benitoz & Josep Pijoan-Mas, 2022. "Government Procurement and Access to Credit: Firm Dynamics and Aggregate Implications," Working Papers 2233, Banco de España.
    17. Andrea Lanteri & Adriano A. Rampini, 2023. "Constrained-Efficient Capital Reallocation," American Economic Review, American Economic Association, vol. 113(2), pages 354-395, February.
    18. Leo Kaas, 2016. "Public debt and total factor productivity," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 61(2), pages 309-333, February.
    19. Wei Cui, 2022. "Macroeconomic Effects of Delayed Capital Liquidation," Journal of the European Economic Association, European Economic Association, vol. 20(4), pages 1683-1742.
    20. Corina Boar & Virgiliu Midrigan, 2019. "Markups and Inequality," 2019 Meeting Papers 1184, Society for Economic Dynamics.

    More about this item

    Keywords

    Financial frictions; Firm heterogeneity; Endogenous growth; Wealth distribution;
    All these keywords.

    JEL classification:

    • E01 - Macroeconomics and Monetary Economics - - General - - - Measurement and Data on National Income and Product Accounts and Wealth; Environmental Accounts

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:ecolet:v:127:y:2015:i:c:p:20-23. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/ecolet .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.