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Credit Constraints and Growth in a Global Economy

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  • 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

    (LSE - London School of Economics and Political Science)

  • Keyu Jin

    (LSE - London School of Economics and Political Science)

Abstract

In a period of rapid integration and accelerated growth in emerging markets, three striking trends have been (1) a divergence in the private saving rates of emerging markets and advanced economies, (2) large net capital outflows from emerging markets, and (3) a sustained decline in the world interest rate. This paper shows that in a multi-period OLG model, the interaction between growth and household credit constraints --- more severe in emerging markets --- is able to account for all of the above facts. We provide micro-level evidence that corroborates our mechanism: saving behaviors across age groups in the U.S. and China are broadly supportive of the predictions of the model.

Suggested Citation

  • Nicolas Coeurdacier & Stéphane Guibaud & Keyu Jin, 2012. "Credit Constraints and Growth in a Global Economy," SciencePo Working papers Main hal-03473915, HAL.
    • Handle: RePEc:hal:spmain:hal-03473915
    Note: View the original document on HAL open archive server: https://hal-sciencespo.archives-ouvertes.fr/hal-03473915
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    References listed on IDEAS

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