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What Does the Walrasian Auctioneer Know? (Or: The Relationship Between Technology Adoption and Financial Innovation.)

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  • Ana Fernandes

Abstract

This paper proposes the view that financial development and economic growth are linked through the characteristics of technology. The most obvious connection between technology and financial innovation emerges through risk-sharing. Technology is modeled as a distribution over outcomes. Technological progress allows higher output realizations to occur and changes the risk-profile of those realizations. The decision to adopt a particular technology endogenously pins down the states of the world the economy will face. Technology adoption will depend on the ability of the financial sector to expand the set of risk-sharing contracts offered to economic agents in response to the changes in the set of states of the world arising from technological progress

Suggested Citation

  • Ana Fernandes, 2004. "What Does the Walrasian Auctioneer Know? (Or: The Relationship Between Technology Adoption and Financial Innovation.)," Econometric Society 2004 North American Winter Meetings 346, Econometric Society.
    • Handle: RePEc:ecm:nawm04:346
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    References listed on IDEAS

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    1. Levine, Ross & Zervos, Sara, 1998. "Stock Markets, Banks, and Economic Growth," American Economic Review, American Economic Association, vol. 88(3), pages 537-558, June.
    2. Ross Levine, 1997. "Financial Development and Economic Growth: Views and Agenda," Journal of Economic Literature, American Economic Association, vol. 35(2), pages 688-726, June.
    3. Robert G. King & Ross Levine, 1993. "Finance and Growth: Schumpeter Might Be Right," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 108(3), pages 717-737.
    Full references (including those not matched with items on IDEAS)

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    JEL classification:

    • E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment
    • G2 - Financial Economics - - Financial Institutions and Services
    • N2 - Economic History - - Financial Markets and Institutions

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