Credit markets and stagnation in an endogenous growth model

• José de Gregorio ^[1]
  1. [1] International Monetary Fund
• Localización: Revista de análisis económico, ISSN-e 0718-8870, ISSN 0716-5927, Vol. 8, Nº 1 (Editor Invitado: William Easterly), 1993, págs. 83-98
• Idioma: inglés
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  • This paper studies the effects that the inability of individuals to borrow against future income has on economic growth. The model assumes thai:

    human capital, which is accumulated through education, is the only factor- of production. It is shown that liquidity constraints reduce growth. Further, in the presence of externalities that may induce two equilibria, it is shown that liquidity constraints not only reduce the rate of growth in the high* growth equilibrium, but can also make the low-growth equilibrium more likely to occur.