Citation

Discussion Paper Details

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Title: Credit Constraints and Growth in a Global Economy

Author(s): Nicolas Coeurdacier, St�phane Guibaud and Keyu Jin

Publication Date: August 2012

Keyword(s): capital flows, credit constraints, Globalization, life-cycle household savings and saving and current account imbalances

Programme Area(s): International Macroeconomics

Abstract: In a period of rapid integration and accelerated growth in emerging markets, three striking trends have been (1) a divergence in the private saving rates of emerging markets and advanced economies, (2) large net capital outflows from emerging markets, and (3) a sustained decline in the world interest rate. This paper shows that in a multi-period OLG model, the interaction between growth and household credit constraints --- more severe in emerging markets --- is able to account for all of the above facts. We provide micro-level evidence that corroborates our mechanism: saving behaviors across age groups in the U.S. and China are broadly supportive of the predictions of the model.

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Bibliographic Reference

Coeurdacier, N, Guibaud, S and Jin, K. 2012. 'Credit Constraints and Growth in a Global Economy'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=9109