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Growth and financial frictions

Author

Listed:
  • Giulio Piccirilli

    (Universitas Mercatorum, via Appia Pignatelli 62, 00168 Roma. Universita` Cattolica, Istituto di Economia e Finanza, Via Necchi 5, 20123 Milano)

Abstract

We build an expanding variety endogenous growth model with search frictions in financial markets. We show that the rate of growth declines with the extent of frictions. We also show that, as frictions gain momentum, the rate of growth becomes more sensitive to exogenous variations in innovation incentives. Thus, the paper provides a rationale for the large growth differentials that characterise countries with inefficient financial markets.

Suggested Citation

  • Giulio Piccirilli, 2013. "Growth and financial frictions," Rivista Internazionale di Scienze Sociali, Vita e Pensiero, Pubblicazioni dell'Universita' Cattolica del Sacro Cuore, vol. 121(2), pages 233-256.
    • Handle: RePEc:vep:journl:y:2013:v:121:i:2:p:233-256
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    More about this item

    Keywords

    Endogenous growth; financial frictions; matching;
    All these keywords.

    JEL classification:

    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy

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