Growth and financial liberalization under capital collateral constraints: The striking case of the stochastic AK model with CARA preferences

Raouf Boucekkine (), Giorgio Fabbri and Patrick Pintus

Economics Letters, 2014, vol. 122, issue 2, 303-307

Abstract: We consider a small-open, collateral-constrained AK economy. We show that the combination of CARA preferences and uncertainty on capital inflows generates long-term growth while the deterministic counterpart does not: long-term growth is entirely driven by precautionary savings, and the asymptotic growth rate of the expected capital stock is increasing in both the risk magnitude and the Arrow–Pratt absolute risk aversion parameters.

Keywords: Financial liberalization; Growth; CARA preferences; Collateral constraints; Precautionary savings (search for similar items in EconPapers)
JEL-codes: F34 F43 O40 (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (23)

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Related works:
Working Paper: Growth and financial liberalization under capital collateral constraints: The striking case of the stochastic AK model with CARA preferences (2014)
Working Paper: Growth and Financial Liberalization under Capital Collateral Constraints: The Striking Case of the Stochastic AK model with CARA Preferences (2013)
Working Paper: Growth and financial liberalization under capital collateral constraints: The striking case of the stochastic AK model with CARA preferences (2013)
Working Paper: Growth and Financial Liberalization under Capital Collateral Constraints: The Striking Case of the Stochastic AK model with CARA Preferences (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:122:y:2014:i:2:p:303-307

DOI: 10.1016/j.econlet.2013.12.009

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