What Does the Walrasian Auctioneer Know? (Or: The Relationship Between Technology Adoption and Financial Innovation.)

Ana Fernandes

No 346, Econometric Society 2004 North American Winter Meetings from Econometric Society

Abstract: This paper proposes the view that financial development and economic growth are linked through the characteristics of technology. The most obvious connection between technology and financial innovation emerges through risk-sharing. Technology is modeled as a distribution over outcomes. Technological progress allows higher output realizations to occur and changes the risk-profile of those realizations. The decision to adopt a particular technology endogenously pins down the states of the world the economy will face. Technology adoption will depend on the ability of the financial sector to expand the set of risk-sharing contracts offered to economic agents in response to the changes in the set of states of the world arising from technological progress

Keywords: Technology Adoption; Financial Innovation; Risk-Sharing (search for similar items in EconPapers)
JEL-codes: E2 G2 N2 (search for similar items in EconPapers)
Date: 2004-08-11
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Persistent link: http://EconPapers.repec.org/RePEc:ecm:nawm04:346

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