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Credit Constraints and Growth in a Global Economy

Author

Listed:
  • Nicolas Coeurdacier

    (ECON - Département d'économie (Sciences Po) - Sciences Po - Sciences Po - CNRS - Centre National de la Recherche Scientifique, CEPR - Center for Economic Policy Research - CEPR)

  • Stéphane Guibaud

    (ECON - Département d'économie (Sciences Po) - Sciences Po - Sciences Po - CNRS - Centre National de la Recherche Scientifique)

  • Keyu Jin

    (LSE - London School of Economics and Political Science)

Abstract

We show that in an open-economy OLG model, the interaction between growth differentials and household credit constraints—more severe in fast-growing countries—can explain three prominent global trends: a divergence in private saving rates between advanced and emerging economies, large net capital outflows from the latter, and a sustained decline in the world interest rate. Micro-level evidence on the evolution of age-saving profiles in the US and China corroborates our mechanism. Quantitatively, our model explains about a third of the divergence in aggregate saving rates, and a significant portion of the variations in age-saving profiles across countries and over time.

Suggested Citation

  • Nicolas Coeurdacier & Stéphane Guibaud & Keyu Jin, 2015. "Credit Constraints and Growth in a Global Economy," SciencePo Working papers Main hal-03392968, HAL.
    • Handle: RePEc:hal:spmain:hal-03392968
    DOI: 10.1257/aer.20130549
    Note: View the original document on HAL open archive server: https://hal-sciencespo.archives-ouvertes.fr/hal-03392968
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    References listed on IDEAS

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    1. Angeletos, George-Marios & Panousi, Vasia, 2011. "Financial integration, entrepreneurial risk and global dynamics," Journal of Economic Theory, Elsevier, vol. 146(3), pages 863-896, May.
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    5. Andrew B. Abel, 2001. "Will Bequests Attenuate The Predicted Meltdown In Stock Prices When Baby Boomers Retire?," The Review of Economics and Statistics, MIT Press, vol. 83(4), pages 589-595, November.
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    Cited by:

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    2. Michael Hatcher & Panayiotis M. Pourpourides, 2023. "Does the impact of private education on growth differ at different levels of credit market development?," Review of Development Economics, Wiley Blackwell, vol. 27(1), pages 291-322, February.
    3. Angelopoulos, Angelos & Economides, George & Liontos, George & Philippopoulos, Apostolis & Sakkas, Stelios, 2022. "Public redistributive policies in general equilibrium: An application to Greece," The Journal of Economic Asymmetries, Elsevier, vol. 26(C).
    4. Davenport, Margaret, 2023. "The time path of productivity convergence and the international allocation of capital," Journal of International Money and Finance, Elsevier, vol. 134(C).
    5. Joydeep Bhattacharya & Monisankar Bishnu & Min Wang, 2023. "Credit Markets with time-inconsistent agents and strategic loan default," Discussion Papers 23-01, Indian Statistical Institute, Delhi.
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