|This centre is a member of The LSE Research Laboratory [RLAB]: CASE | CVER | CEP | SERC | STICERD||Cookies?|
Paper No' DEDPS 21: | Full paper
Save Reference as: BibTeX File | EndNote Import File
Keywords: Externalities; market imperfections, growth, multiple equilibria, sunspot equilibria
Is hard copy/paper copy available? YES - Paper Copy Still In Print.
This Paper is published under the following series: Development Economics
Share this page: Google Bookmarks | Facebook | Twitter
Abstract:In this paper we have built a model of financial intermediation that explains the GDP variability pattern of an economy during the development process. In our model, per capita is more volatile in the middle-income economies than in both low and high-income economies. We show that, if the model economy is in the early or in the mature stages of development there is a unique equilibrium. However, in the middle stages of development multiple equilibria arise. Moreover, we find that in economies with imperfect credit markets, per capita output volatility tends to be higher than in economies with perfect or non-existent credit markets.
Copyright © RLAB & LSE 2003 - 2015 | LSE, Houghton Street, London WC2A 2AE | Contact: RLAB | Site updated 27 May 2015