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Limited Market Participation, Financial Intermediaries,And Endogenous Growth

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  • Hiroaki OHNO

    () (Department of Economics, Tokyo International University, Japan)

Abstract

This paper analyzes the role of imperfect asset markets and financial intermediaries in determining the equilibrium growth rate of the capital stock by incorporating exogenous market participation constraints into an overlapping generation¡¯s economy. Economic growth and social welfare monotonically increase with the degree of market participation. Hence, economies with financial intermediaries have a stronger potential for a higher growth rate than economies with imperfect markets lacking such institutions.

Suggested Citation

  • Hiroaki OHNO, 2011. "Limited Market Participation, Financial Intermediaries,And Endogenous Growth," Review of Economics & Finance, Better Advances Press, Canada, vol. 1, pages 53-62, August.
  • Handle: RePEc:bap:journl:110404
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    References listed on IDEAS

    as
    1. Romer, Paul M, 1986. "Increasing Returns and Long-run Growth," Journal of Political Economy, University of Chicago Press, vol. 94(5), pages 1002-1037, October.
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    8. Weil, Philippe, 1992. "Hand-to-mouth consumers and asset prices," European Economic Review, Elsevier, vol. 36(2-3), pages 575-583, April.
    9. Ohno, Hiroaki, 2009. "Incomplete market participation, endogenous endowment risks and welfare," Journal of Economics and Business, Elsevier, vol. 61(5), pages 392-403, September.
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    14. Huggett, Mark, 1993. "The risk-free rate in heterogeneous-agent incomplete-insurance economies," Journal of Economic Dynamics and Control, Elsevier, vol. 17(5-6), pages 953-969.
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    More about this item

    Keywords

    Limited market participation; Financial intermediaries; Endogenous growth model;

    JEL classification:

    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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