Economic development, flow of funds, and the equilibrium interaction of financial frictions

Moll, Benjamin ORCID: 0009-0003-6067-359X, Townsend, Robert M. and Zhorin, Victor (2017) Economic development, flow of funds, and the equilibrium interaction of financial frictions. Proceedings of the National Academy of Sciences of the United States of America, 114 (24). 6176 - 6184. ISSN 0027-8424

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Abstract

We use a variety of different datasets from Thailand to study not only the extremes of micro and macro variables but also withincountry flow of funds and labor migration. We develop a general equilibrium model that encompasses regional variation in the type of financial friction and calibrate it to measured variation in regional aggregates. The model predicts substantial capital and labor flows fromrural to urban areas even though these differ only in the underlying financial regime. Predictions for micro variables not used directly provide a model validation. Finally, we estimate the impact of a policy of counterfactual, regional isolationism.

Item Type:	Article
Official URL:	https://www.pnas.org/
Additional Information:	© 2017 The Authors
Divisions:	Economics
Subjects:	H Social Sciences > HB Economic Theory H Social Sciences > HD Industries. Land use. Labor H Social Sciences > HG Finance
Date Deposited:	06 Nov 2019 13:57
Last Modified:	12 Dec 2024 01:57
URI:	http://eprints.lse.ac.uk/id/eprint/102398

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