Credit constraints and growth in a global economy

Coeurdacier, Nicolas, Guibaud, Stéphane and Jin, Keyu ORCID: 0000-0002-0139-799X (2015) Credit constraints and growth in a global economy. American Economic Review, 105 (9). pp. 2838-2881. ISSN 0002-8282

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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 a third 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:	Article
Official URL:	https://www.aeaweb.org/index.php
Additional Information:	© 2015 The American Economic Review
Divisions:	Economics
Subjects:	H Social Sciences > HC Economic History and Conditions
JEL classification:	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
Date Deposited:	19 May 2015 14:55
Last Modified:	05 Apr 2024 06:03
Funders:	ANR (Chaire d’Excellence INTPORT), ERC (Starting Grant INFINHET), Banque de France
URI:	http://eprints.lse.ac.uk/id/eprint/62016

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