Financial Intermediation, Variability and the Development Process

• Autores: Luis Carranza, José Enrique Galdón Sánchez
• Localización: Working Papers ( Universidad de Navarra. Facultad de Ciencias Económicas y Empresariales ), Nº. 4, 2002
• Idioma: inglés
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• Resumen

  • In this paper we build a model of financial intermediation that explains the GDP variability pattern of an economy during the development process. We find evidence that per capita output is more volatile in 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, multi-ple 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.