Long-run growth and intragenerational transfer under capital market imperfections

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Abstract

The purpose of this paper is to provide a long-run growth model linking growth to income distribution between lenders and borrowers in an environment where enforcement of loan contracts is imperfect. The equilibrium under costly verification implies a smaller growth rate, relative to the symmetric-information economy. Intragenerational transfer of income is shown to promote growth so long as the redistribution gives rise to an increase in net worth positions of borrowers.

Original languageEnglish
Pages (from-to)390-409
Number of pages20
JournalJapanese Economic Review
Volume48
Issue number4
DOIs
Publication statusPublished - 1997 Jan 1
Externally publishedYes

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ASJC Scopus subject areas

  • Economics and Econometrics

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