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Financial Market Imperfections and Productivity Growth

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  • Bruce C. Greenwald
  • Joseph E. Stiglitz

Abstract

This paper examines the impact of financial market imperfections on long-term productivity growth. It focuses on failures in markets for the sale of equity securities and hence on the failure of markets which help firms diversify the risks of real investment. The paper examines separately situations in which productivity growth is driven by learning-by-doing and where it results from the cumulative impact of explicit investments in technology by firms, In general, a multiplicity of steady-state growth paths exists with different growth rates along each path. The particular path followed by any single economy (and hence the growth rate of that economy) will depend significantly on policy interventions which mitigate effects of financial markets.

Suggested Citation

  • Bruce C. Greenwald & Joseph E. Stiglitz, 1989. "Financial Market Imperfections and Productivity Growth," NBER Working Papers 2945, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:2945
    Note: ME
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • D20 - Microeconomics - - Production and Organizations - - - General
    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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