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Credit Markets and Stagnation in an Endogenous Growth Model

Author

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  • Mr. Jose De Gregorio

Abstract

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.

Suggested Citation

  • Mr. Jose De Gregorio, 1993. "Credit Markets and Stagnation in an Endogenous Growth Model," IMF Working Papers 1993/072, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:1993/072
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    Citations

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    Cited by:

    1. Prof. Dr. Robert Holzmann, 1994. "Funded and Private Pensions for Eastern European Countries in Transition?," Public Economics 9405004, University Library of Munich, Germany.
    2. Abu N. M. Wahid & Muhammad Shahbaz & Pervaz Azim, 2011. "Inflation and Financial Sector Correlation: The Case of Bangladesh," International Journal of Economics and Financial Issues, Econjournals, vol. 1(4), pages 145-152.
    3. Robert Holzmann & Christian Thimann & Angela Petz, 1994. "Pressure to Adjust: Consequences for the OECD Countries from Reforms in Eastern Europe," International Trade 9403001, University Library of Munich, Germany.
    4. Ben Fine, 1998. "Endogenous Growth Theory: A Critical Assessment," Working Papers 80, Department of Economics, SOAS University of London, UK.
    5. Ricardo N. Bebczuk, 2000. "Financiamiento empresario, desarrollo financiero y crecimiento," Premio de Banca Central Rodrigo Gómez / Central Banking Award "Rodrigo Gómez", Centro de Estudios Monetarios Latinoamericanos, CEMLA, number prg2000, July-Dece.
    6. Haroon Khan, 2015. "The Impact of Inflation on Financial Development," International Journal of Innovation and Economic Development, Inovatus Services Ltd., vol. 1(4), pages 42-48, October.
    7. Ricardo N. Bebczuk, 2000. "Corporate Finance, Financial Development, and Growth," Premio de Banca Central Rodrigo Gómez / Central Banking Award "Rodrigo Gómez", Centro de Estudios Monetarios Latinoamericanos, CEMLA, number prg2000eng, July-Dece.

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