Savings, Growth and Capital Markets Imperfections: The Case of Borrowing Constraints

34 Pages Posted: 15 Feb 2006

See all articles by Jose de Gregorio

Jose de Gregorio

Central Bank of Chile; Universidad de Chile; National Bureau of Economic Research (NBER)

Date Written: March 1993

Abstract

This paper studies the effects that borrowing constraints have on savings and growth and argues that, though they increase savings, their effect on growth is ambiguous. Empirical evidence on the extent of borrowing constraints as well as savings, investment, human capital accumulation and growth performance for industrialized countries is presented. A simple model to show the effects of borrowing constraints on savings is developed. Then the model is extended to analyze the effects of borrowing constraints on human capital accumulation and growth. It is shown that borrowing constraints increase savings, but reduce human capital accumulation.

JEL Classification: E21, O16, O41

Suggested Citation

de Gregorio, Jose, Savings, Growth and Capital Markets Imperfections: The Case of Borrowing Constraints (March 1993). IMF Working Paper No. 93/31, Available at SSRN: https://ssrn.com/abstract=883475

Jose De Gregorio (Contact Author)

Central Bank of Chile ( email )

Agustinas 1180
Santiago
Chile

Universidad de Chile ( email )

Ministry of Finance Teatinos l20 - Piso l2
Santiago
Chile

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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