Credit Constraints and Growth in a Global Economy

Nicolas Coeurdacier, Stéphane Guibaud and Keyu Jin ()

No 9109, CEPR Discussion Papers from C.E.P.R. Discussion Papers

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.

Keywords: capital flows; credit constraints; Globalization; life-cycle household savings; saving and current account imbalances (search for similar items in EconPapers)
JEL-codes: F21 F32 F41 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dge and nep-opm
Date: 2012-08
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