Explaining Economic Growth with Imperfect Credit Markets

December 1, 2000

Preview Citation

Format: Chicago

Luis Carranza. Explaining Economic Growth with Imperfect Credit Markets, (USA: International Monetary Fund, 2000) accessed December 26, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

The purpose of this paper is to explain the humped-shaped behavior of the growth rate. Within a dynamic general equilibrium framework, it is found that, in the early stages of development, the source of growth is the reallocation of resources from sectors low-productivity sectors to high-productivity sectors (“extensive growth”), resulting in increasing growth rates. In the middle and mature stages of development, the source of growth is the higher average productivity achieved by the competition among entrepreneurs (“intensive growth”). As a result, the growth rate could be increasing in the middle stage and then displays a decreasing pattern during the mature stage.

Subject: Credit, Income, Income distribution, Labor, Money, National accounts, Production, Productivity, Self-employment

Keywords: Credit, Credit constraint, Credit restriction, Credit-constraint economy, Demand function, Economic growth, Economy experience, Growth, Income, Income distribution, Market imperfections, Productivity, Productivity shock, Self-employment, Wealth dynamics, WP

Publication Details

Pages:

29
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2000/193
Stock No:

WPIEA1932000
ISBN:

9781451859805
ISSN:

1018-5941

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