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.
In a period of rapid integration and accelerated growth in emerging markets, three striking trends have been (1) a large and persistent increase in the private savings rate in emerging markets and fall in advanced economies, (2) large net capital out ows away from emerging markets, and (3) a sustained decline in the world interest. We add to an additional important fact: private savings is the main driver of the cross- sectional variation in the current account in the past data. Standard models do poorly in accounting for these facts. We show that incorporating asymmetric household credit constraints in a global general-equilibrium model can deliver qualitatively consistent and quantitatively significant results. An important implication of our model is that countries with identical preferences may see opposite responses of the savings rate to changes in the common world interest rate.
|Item Type:||Monograph (Working Paper)|
|Additional Information:||© 2011 INSEAD|
|Uncontrolled Keywords:||Globalization, capital ows, credit constraints, current account, demographics, social security.|
|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
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