Financial Deepening, Inequality, and Growth: A Model-Based Quantitative Evaluation

65 Pages Posted: 6 Feb 2006

See all articles by Robert M. Townsend

Robert M. Townsend

MIT - Department of Economics

Kenichi Ueda

University of Tokyo - Faculty of Economics

Date Written: September 2003

Abstract

We propose a coherent unified approach to the study of the linkages among economic growth, financial structure, and inequality, bringing together disparate theoretical and empirical literature. That is, we show how to conduct model-based quantitative research on transitional paths. With analytical and numerical methods, we calibrate and make tractable a prototype canonical model and take it to an application, namely, Thailand 1976-1996, an emerging economy in a phase of economic expansion with uneven financial deepening and increasing inequality. We broadly replicate the actual data, test the model formally, and identify anomalies.

Keywords: Financial deepening, inequality, growth, transitional dynamics

JEL Classification: C52, G20, O16, O41

Suggested Citation

Townsend, Robert M. and Ueda, Kenichi, Financial Deepening, Inequality, and Growth: A Model-Based Quantitative Evaluation (September 2003). IMF Working Paper, Vol. , pp. 1-65, 2003. Available at SSRN: https://ssrn.com/abstract=880308

Robert M. Townsend (Contact Author)

MIT - Department of Economics ( email )

Bldg. E52-252c
50 Memorial Drive
Cambridge, MA 02142
United States
617-452-3722 (Phone)
617-253-1330 (Fax)

Kenichi Ueda

University of Tokyo - Faculty of Economics ( email )

7-3-1 Hongo, Bunkyo-ku
Tokyo 113-0033
Japan

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