Credit Constraints and Growth in a Global Economy

65 Pages Posted: 28 Sep 2012

See all articles by Nicolas Coeurdacier

Nicolas Coeurdacier

ESSEC Business School - Finance Department

Stéphane Guibaud

SciencesPo - Department of Economics

Keyu Jin

London School of Economics & Political Science (LSE)

Date Written: August 2012

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.

Keywords: capital flows, credit constraints, Globalization, life-cycle household savings, saving and current account imbalances

JEL Classification: F21, F32, F41

Suggested Citation

Coeurdacier, Nicolas and Guibaud, Stephane and Jin, Keyu, Credit Constraints and Growth in a Global Economy (August 2012). CEPR Discussion Paper No. DP9109, Available at SSRN: https://ssrn.com/abstract=2153490

Nicolas Coeurdacier

ESSEC Business School - Finance Department ( email )

Avenue Bernard Hirsch
BP 105 Cergy Cedex, 95021
France

Stephane Guibaud

SciencesPo - Department of Economics ( email )

28 Rue des Saints-Pères
Paris, 75007
France

Keyu Jin

London School of Economics & Political Science (LSE) ( email )

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