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A Simple Model of Endogenous Growth with Financial Frictions and Firm Heterogeneity

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  • Kazuo MIno

    (Kyoto University)

Abstract

This paper constructs a simple model of endogenous growth with ?financial frictions and ?firm heterogeneity. In the presence of fi?nancial constraints and heterogeneity in pro- duction efficiency of fi?rms, the fi?rms whose efficiency exceeds the cutoff level produce and the entrepreneurs who own those fi?rms become borrowers. We show that even if production technology of each fi?rm has an Ak property, the aggregate economy has transition dynamics and that the balanced growth rate depends on the aggregate distribution of wealth between rentiers and entrepreneurs.

Suggested Citation

  • Kazuo MIno, 2014. "A Simple Model of Endogenous Growth with Financial Frictions and Firm Heterogeneity," KIER Working Papers 908, Kyoto University, Institute of Economic Research.
    • Handle: RePEc:kyo:wpaper:908
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    File URL: http://www.kier.kyoto-u.ac.jp/DP/DP908.pdf
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    References listed on IDEAS

    as
    1. Vincenzo Quadrini, 2011. "Financial frictions in macroeconomic fluctations," Economic Quarterly, Federal Reserve Bank of Richmond, vol. 97(3Q), pages 209-254.
    2. Nir Jaimovich & Sergio Rebelo, 2017. "Nonlinear Effects of Taxation on Growth," Journal of Political Economy, University of Chicago Press, vol. 125(1), pages 265-291.
    3. repec:fip:fedreq:y:2011:i:3q:p:209-254:n:vol.97no.3 is not listed on IDEAS
    4. Jianjun Miao & Pengfei Wang, 2012. "Bubbles and Total Factor Productivity," American Economic Review, American Economic Association, vol. 102(3), pages 82-87, May.
    5. Oleg Itskhoki & Benjamin Moll, 2019. "Optimal Development Policies With Financial Frictions," Econometrica, Econometric Society, vol. 87(1), pages 139-173, January.
    6. Benjamin Moll, 2014. "Productivity Losses from Financial Frictions: Can Self-Financing Undo Capital Misallocation?," American Economic Review, American Economic Association, vol. 104(10), pages 3186-3221, October.
    7. Zheng Liu & Pengfei Wang, 2014. "Credit Constraints and Self-Fulfilling Business Cycles," American Economic Journal: Macroeconomics, American Economic Association, vol. 6(1), pages 32-69, January.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Quoc Hung Nguyen, 2019. "Growth Model with Financial Deepening and Productivity Heterogeneity," The Japanese Economic Review, Springer, vol. 70(1), pages 123-140, March.
    2. Tsuboi, Mizuki, 2019. "Resource scarcity, technological progress, and stochastic growth," Economic Modelling, Elsevier, vol. 81(C), pages 73-88.
    3. Nguyen Quoc Hung, 2020. "Financial deepening in a two-sector endogenous growth model with productivity heterogeneity," The B.E. Journal of Macroeconomics, De Gruyter, vol. 20(1), pages 1-19, January.
    4. Giovannetti, Andrea, 2021. "The anatomy of buyer–seller dynamics in decentralized markets," International Review of Financial Analysis, Elsevier, vol. 77(C).
    5. Kazuo Mino, 2016. "Fiscal Policy in a Growing Economy with Financial Frictions and Firm Heterogeneity," The Japanese Economic Review, Japanese Economic Association, vol. 67(1), pages 3-30, March.
    6. Atsushi Miyake & Kazunobu Muro, 2022. "Credit market imperfection and goods market deregulation in OLG model," Review of Development Economics, Wiley Blackwell, vol. 26(4), pages 2436-2453, November.

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    More about this item

    Keywords

    financial frictions; firm heterogeneity; endogenous growth; wealth distribution;
    All these keywords.

    JEL classification:

    • E01 - Macroeconomics and Monetary Economics - - General - - - Measurement and Data on National Income and Product Accounts and Wealth; Environmental Accounts
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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