Transitional Growth with Increasing Inequality and Financial Deepening
Electronic Access:
Free Download. Use the free Adobe Acrobat Reader to view this PDF file
Summary:
We study models that display growth with financial deepening and increasing inequality along the way to perpetual steady state growth. A benchmark model is essentially a complete markets model but with transaction costs of financial intermediation. New proofs are required and thus provided for stochastic dynamic programming for the case of unbounded return functions and perpetual growth with a non-convex transaction technology. We calibrate the model and report quantitative predictions for Thailand during 1976-96. We find a discrepancy between the model and the data, suspect barriers to financial deepening as a cause, and evaluate the associated welfare loss.
Series:
Working Paper No. 2001/108
Subject:
Banking Consumption Economic sectors Financial sector Income distribution Income inequality National accounts Population and demographics
English
Publication Date:
August 1, 2001
ISBN/ISSN:
9781451853100/1018-5941
Stock No:
WPIEA1082001
Pages:
84
Please address any questions about this title to publications@imf.org