DYNAMICS OF A SIMPLE ENDOGENOUS GROWTH MODEL WITH FINANCIAL INTERMEDIATION

Dominika Byrska, Adam Krawiec and Marek Szydłowski

Macroeconomic Dynamics, 2021, vol. 25, issue 5, 1288-1302

Abstract: We study an impact of the financial intermediation on economic growth. We assume the simple model of the economic growth in the form of an autonomous dynamical system with a financial sector represented by banks and real sector represented by households and firms. We assume that financial intermediation services are described by financial intermediation technology which is a function depending on the share of labor employed by banks. Investments realized by firms depend not only on savings accumulated by banks but also on financial intermediation technology. We obtain a three-dimensional dynamical system and analyze the existence of a saddle equilibrium in the growth process associated with financial intermediation. Using mathematical methods of dynamical systems, we analyze growth paths, and we study the stationary states of the system and their stability. We found that equilibrium is reached only by trajectories located on two submanifolds. The resulting analysis provides an insight into the saddle solution with a stable incoming separatrix lying on one of the invariant manifolds.

Date: 2021
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://www.cambridge.org/core/product/identifier/ ... type/journal_article link to article abstract page (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cup:macdyn:v:25:y:2021:i:5:p:1288-1302_8

Access Statistics for this article

More articles in Macroeconomic Dynamics from Cambridge University Press Cambridge University Press, UPH, Shaftesbury Road, Cambridge CB2 8BS UK.
Bibliographic data for series maintained by Kirk Stebbing ().