Explaining Economic Growth with Imperfect Credit Markets


Luis Carranza

Publication Date:

December 1, 2000

Electronic Access:

Free Download. 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


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.


Working Paper No. 2000/193



Publication Date:

December 1, 2000



Stock No:




Please address any questions about this title to publications@imf.org