IDEAS home Printed from https://ideas.repec.org/a/cup/macdyn/v7y2003i03p363-393_02.html

Financial Intermediation In A Model Of Growth Through Creative Destruction

Author

Listed:
  • Morales, María F.

Abstract

This paper presents an endogenous growth model in which the research activity is financed by intermediaries that are able to reduce the incidence of researcher's moral hazard. It is shown that financial activity is growth promoting because it increases research productivity. It is also found that a subsidy to the financial sector may have larger growth effects than a direct subsidy to research. Moreover, because of the presence of moral hazard, increasing the subsidy rate to R&D may reduce the growth rate. I show that there exists a negative relation between the financing of innovation and the process of capital accumulation. Concerning welfare, the presence of two externalities of opposite sign stemming from financial activity may cause the no-tax equilibrium to provide an inefficient level of financial services. Thus, policies oriented to balance the effects of the two externalities will be welfare improving.

Suggested Citation

  • Morales, María F., 2003. "Financial Intermediation In A Model Of Growth Through Creative Destruction," Macroeconomic Dynamics, Cambridge University Press, vol. 7(3), pages 363-393, June.
    • Handle: RePEc:cup:macdyn:v:7:y:2003:i:03:p:363-393_02
    as

    Download full text from publisher

    File URL: https://www.cambridge.org/core/product/identifier/S1365100502020138/type/journal_article
    File Function: link to article abstract page
    Download Restriction: no
    ---><---

    Other versions of this item:

    More about this item

    JEL classification:

    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy
    • G20 - Financial Economics - - Financial Institutions and Services - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cup:macdyn:v:7:y:2003:i:03:p:363-393_02. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Kirk Stebbing (email available below). General contact details of provider: https://www.cambridge.org/mdy .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.