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(Non-Monotonic) Effects of Productivity and Credit Constraints on Equilibrium Aggregate Production in General Equilibrium Models with Heterogeneous Producers

Author

Listed:
  • Ngoc-Sang Pham

    (EM Normandie - École de Management de Normandie = EM Normandie Business School)

Abstract

In a market economy, the aggregate production level depends not only on the aggregate variables but also on the distribution of individual characteristics (e.g., productivity, credit limit, ...). We point out that, due to financial frictions, the equilibrium aggregate production may be non-monotonic in both individual productivity and credit limit. We provide conditions under which this phenomenon happens. By consequence, improving productivity or relaxing credit limit of firms may not necessarily be beneficial to economic development.

Suggested Citation

  • Ngoc-Sang Pham, 2025. "(Non-Monotonic) Effects of Productivity and Credit Constraints on Equilibrium Aggregate Production in General Equilibrium Models with Heterogeneous Producers," Working Papers hal-04901381, HAL.
    • Handle: RePEc:hal:wpaper:hal-04901381
    Note: View the original document on HAL open archive server: https://hal.science/hal-04901381v1
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