Credit constraints, growth and inequality dynamics

Show simple item record Getachew, Yoseph 2016-06-24T06:41:28Z 2016-04
dc.description.abstract This paper examines how credit constraints a¤ect the dynamics of wealth and thereby the dynamics of capital and output growth. We develop standard Ak growth models that display transitional dynamics, contrary to general belief, once the com- plete credit markets assumption is relaxed. The mechanism is that credit constraints make individual productivity di¤erences persist, which in turn leads to the persis- tence of income inequality. The dynamics of inequality is jointly determined with the dynamics of aggregate capital. The economy thus passes through a transitional period of inequality, individual and aggregate capital dynamics before it converges to a long-run balanced growth path. The application of the model to the analysis of intergenerational mobility and inequality dynamics suggests substantial economic and policy signi cance. In particular, introducing credit constraints to the Barro Ak model, public investment could have an indirect impact on growth via its e¤ect on inequality and mobility. en_ZA
dc.description.department Economics en_ZA
dc.description.embargo 2017-04-30
dc.description.librarian hb2016 en_ZA
dc.description.uri en_ZA
dc.identifier.citation Getachew, Y 2016, 'Credit constraints, growth and inequality dynamics', Economic Modelling, vol. 54, pp. 364-376. en_ZA
dc.identifier.issn 0264-9993 (print)
dc.identifier.issn 1873-6122 (online)
dc.identifier.other 10.1016/j.econmod.2016.01.005
dc.language.iso en en_ZA
dc.publisher Elsevier en_ZA
dc.rights © 2016 Elsevier B.V. All rights reserved. Notice : this is the author’s version of a work that was accepted for publication in Economic Modelling. Changes resulting from the publishing process, such as peer review, editing, corrections, structural formatting, and other quality control mechanisms may not be reflected in this document. Changes may have been made to this work since it was submitted for publication. A definitive version was subsequently published in Economic Modelling, vol. 54, pp. 364-376, 2016. doi : 10.1016/j.econmod.2016.01.005. en_ZA
dc.subject Incomplete markets en_ZA
dc.subject Inequality dynamics en_ZA
dc.subject Intergenerational mobililty en_ZA
dc.subject Transitional dynamics en_ZA
dc.subject Ak growth model en_ZA
dc.title Credit constraints, growth and inequality dynamics en_ZA
dc.type Postprint Article en_ZA

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