Savings, Growth and Capital Markets Imperfections: The Case of Borrowing Constraints
March 1, 1993
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Summary
This paper studies the effects that borrowing constraints have on savings and growth and argues that, though they increase savings, their effect on growth is ambiguous. Empirical evidence on the extent of borrowing constraints as well as savings, investment, human capital accumulation and growth performance for industrialized countries is presented. A simple model to show the effects of borrowing constraints on savings is developed. Then the model is extended to analyze the effects of borrowing constraints on human capital accumulation and growth. It is shown that borrowing constraints increase savings, but reduce human capital accumulation.
Subject: Capital accumulation, Capital markets, Consumption, Financial markets, Human capital, Income, Labor, National accounts
Keywords: Capital accumulation, capital market, capital market imperfection, Capital markets, Consumption, first period savings, flat incomes profile, generation saving, growth from Modigliani, Human capital, Income, interest rate, mortgage market, physical capital, rate of an economy, savings data, savings literature, savings performance, savings rate, WP
Pages:
34
Volume:
1993
DOI:
Issue:
031
Series:
Working Paper No. 1993/031
Stock No:
WPIEA0311993
ISBN:
9781451844979
ISSN:
1018-5941
