Consumption, investment and financial intermediation in a Ramsey model
The productivity of capital and the discount rate for future consumption are more important for economic growth than the cost of financial intermediation. Using analytical and numerical illustrations from a version of the Ramsey model this study illustrates how parameters of preferences in consumption, productivity and depreciation rates of capital and costs of financial intermediation interact and determine the levels of output, consumption, investment and capital stock in a growing economy.
Volume (Year): 1 (2005)
Issue (Month): 6 (November)
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