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Saving, Growth and Liquidity Constraints


  • Jappelli, Tullio
  • Pagano, Marco


In the context of an overlapping generations model, we show that liquidity constraints on households: (i) raise the saving rate; (ii) strengthen the effect of growth on saving; and (iii) increase the growth rate if productivity growth is endogenous. These propositions are supported by cross-country regressions of saving and growth rates on indicators of liquidity constraints on households. The results suggest that financial deregulation in the 1980s has contributed to the decline in national saving rates in the OECD countries and that the process of financial integration in the European Community may lead to a further reduction in saving and growth rates.

Suggested Citation

  • Jappelli, Tullio & Pagano, Marco, 1992. "Saving, Growth and Liquidity Constraints," CEPR Discussion Papers 662, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:662

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    References listed on IDEAS

    1. Gylfason, Thorvaldur, 1991. "Iceland on the Outskirts of Europe: The Common Property Resource Problem," CEPR Discussion Papers 530, C.E.P.R. Discussion Papers.
    2. Lippi, Marco & Reichlin, Lucrezia, 1993. "The Dynamic Effects of Aggregate Demand and Supply Disturbances: Comment," American Economic Review, American Economic Association, vol. 83(3), pages 644-652, June.
    3. Tamim Bayoumi & Barry Eichengreen, 1992. "Shocking Aspects of European Monetary Unification," NBER Working Papers 3949, National Bureau of Economic Research, Inc.
    4. Eichengreen, Barry, 1990. "Is Europe an Optimum Currency Area?," CEPR Discussion Papers 478, C.E.P.R. Discussion Papers.
    5. Morris Goldstein & Geoffrey Woglom, 1991. "Market-Based Fiscal Discipline in Monetary Unions; Evidence From the U.S. Municipal Bond Market," IMF Working Papers 91/89, International Monetary Fund.
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    More about this item


    Growth; Liquidity Constraints; Saving;

    JEL classification:

    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance


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