Location of Repository

Credit constraints and growth in a global economy

By Keyu Jin, Stéphane Guibaud and Nicolas Coeurdacier

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 U.S. and China corroborates our mechanism. Quantitatively, our model explains about 40 percent of the divergence in aggregate saving rates, and a significant portion of the variations in age-saving profiles across countries and over time

Topics: HB Economic Theory
Publisher: Department of Economics, London School of Economics and Political Science
Year: 2011
OAI identifier: oai:eprints.lse.ac.uk:35706
Provided by: LSE Research Online

Suggested articles

Preview


To submit an update or takedown request for this paper, please submit an Update/Correction/Removal Request.