Capital Market Imperfection and Economic Growth
This paper explains adverse international capital flows and economic growth using a model with asymmetric information in the capital market. The capital markets in developing countries are found to suffer more severely from asymmetric information than those in developed ones, which results in a lower rate of return on investment and severer credit rationing. Thus, capital flows from developing to developed countries, lowering the growth rate of the developing countries.
|Date of creation:||Aug 2002|
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- Xavier Sala-i-Martin, 1990.
"Lecture Notes on Economic Growth(I): Introduction to the Literature and Neoclassical Models,"
NBER Working Papers
3563, National Bureau of Economic Research, Inc.
- Xavier Sala-i-Martin, 1994. "Lecture notes on economic growth (I): Introduction to the literature and Neoclassical models," Economics Working Papers 77, Department of Economics and Business, Universitat Pompeu Fabra.
- Ernst-Ludwig von Thadden, 1995. "Long-Term Contracts, Short-Term Investment and Monitoring," Review of Economic Studies, Oxford University Press, vol. 62(4), pages 557-575.
- Xavier Sala-i-Martin, 1994.
"Lecture notes on economic growth (II): Five prototype models of endogenous growth,"
Economics Working Papers
78, Department of Economics and Business, Universitat Pompeu Fabra.
- Xavier Sala-i-Martin, 1990. "Lecture Notes on Economic Growth(II): Five Prototype Models of Endogenous Growth," NBER Working Papers 3564, National Bureau of Economic Research, Inc.
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