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Financial intermediation, variability and the development process

Carranza, Luis and Galdón-Sánchez, Jose E. (2000) Financial intermediation, variability and the development process. DEDPS, 21. Suntory and Toyota International Centres for Economics and Political Science, London School of Economics and Political Science, London, UK.

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Identification Number: 21

Abstract

In this paper we have built a model of financial intermediation that explains the GDP variability pattern of an economy during the development process. In our model, per capita is more volatile in the middle-income economies than in both low and high-income economies. We show that, if the model economy is in the early or in the mature stages of development there is a unique equilibrium. However, in the middle stages of development multiple equilibria arise. Moreover, we find that in economies with imperfect credit markets, per capita output volatility tends to be higher than in economies with perfect or non-existent credit markets.

Item Type: Monograph (Discussion Paper)
Official URL: http://sticerd.lse.ac.uk
Additional Information: © 2000 Luis Carranza and Jose E. Galdón-Sánchez
Subjects: H Social Sciences > HG Finance
Sets: Collections > Economists Online
Research centres and groups > Suntory and Toyota International Centres for Economics and Related Disciplines (STICERD)
Date Deposited: 08 Jul 2008 10:34
Last Modified: 01 Oct 2010 08:58
URI: http://eprints.lse.ac.uk/id/eprint/6660

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