How to order
IMF Publications

Working Papers in full text
2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 All


Other research-related activities and publications of the IMF can be found at IMF Research

Free Email Notification

Receive emails when we post new items of interest to you.

Subscribe or Modify your profile



Growth and Capital Flows with Risky Entrepreneurship

Author/Editor: Sandri, Damiano
Authorized for Distribution: February 1, 2010
Electronic Access: Free Full Text (PDF file size is 1,435KB)
Use the free Adobe Acrobat Reader to view this PDF file.
 
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: This paper shows that the behavior of entrepreneurs facing incomplete financial markets and risky investment can explain why growth accelerations in developing countries tend to be associated with current account improvements. The uninsurable risk of losing invested capital forces entrepreneurs to rely on self-financing, so that when business opportunities open up entrepreneurs increase saving to finance the investment that produces growth. The key insight is that saving has to rise more than investment to allow also for the accumulation of precautionary assets. Plausibly calibrated simulations show that this net saving increase can sustain large and persistent net capital outflows.
 
Order a print copy
Series: Working Paper No. 10/37
Subject(s): Capital flows | Capital outflows | Economic growth | Economic models | Financial risk | Private investment | Private savings | Private sector
Author's keyword(s): Investment Risk | Saving | Capital Flows | Financial Development | Growth.
 
English  
    Published:   February 1, 2010        
            Format:   Paper
    Stock No:   WPIEA2010037   Pages:   26
    Price:   US$18.00 (Academic Rate: US$18.00 )
       
     
Please address any questions about this title to publications@imf.org.