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Credit constraints and growth in a global economy

Jin, Keyu, Guibaud, Stéphane and Coeurdacier, Nicolas (2011) Credit constraints and growth in a global economy. Finance seminar series, Department of Economics, London School of Economics and Political Science, London, UK.

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Abstract

We show that in an open-economy OLG model, the interaction between growth differentials and household credit constraints, more severe in fast-growing countries, can explain three prominent global trends: a divergence in private saving rates between advanced and emerging economies, large net capital outflows from the latter, and a sustained decline in the world interest rate. Micro-level evidence on the evolution of age-saving profiles in the U.S. and China corroborates our mechanism. Quantitatively, our model explains about 40 percent of the divergence in aggregate saving rates, and a significant portion of the variations in age-saving profiles across countries and over time.

Item Type: Monograph (Working Paper)
Official URL: http://personal.lse.ac.uk/jink/credit.pdf
Additional Information: © 2011 INSEAD
Library of Congress subject classification: H Social Sciences > HB Economic Theory
Journal of Economic Literature Classification System: F - International Economics > F2 - International Factor Movements and International Business > F21 - International Investment; Long-Term Capital Movements
F - International Economics > F3 - International Finance > F32 - Current Account Adjustment; Short-Term Capital Movements
F - International Economics > F4 - Macroeconomic Aspects of International Trade and Finance > F41 - Open Economy Macroeconomics
Sets: Departments > Economics
Collections > Economists Online
Rights: http://www.lse.ac.uk/library/usingTheLibrary/academicSupport/OA/depositYourResearch.aspx
Date Deposited: 20 Apr 2011 12:01
URL: http://eprints.lse.ac.uk/35706/

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