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Credit Constraints and Growth in a Global Economy

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  • Nicolas Coeurdacier

    (Département d'économie)

  • Stéphane Guibaud

    (London School of Economics and Political Science)

  • Keyu Jin

    (London School of Economics and Political Science (LSE))

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," Sciences Po publications 9109, Sciences Po.
  • Handle: RePEc:spo:wpmain:info:hdl:2441/c87bgksc18ba9tn72tqcganvu
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    More about this item

    Keywords

    capital flows; credit constraints; Globalization; life-cycle household savings; saving and current account imbalances;
    All these keywords.

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

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