Financial Deepening

Nobuhiro Kiyotaki and John Moore
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Nobuhiro Kiyotaki: London School of Economics,

Journal of the European Economic Association, 2005, vol. 3, issue 2-3, 701-713

Abstract: We develop a model of financial deepening, based on the distinction between limited bilateral commitment and limited multilateral commitment. We explore the effects of secular changes in financial depth on investment and output; on intermediation and interest rates; on the long-run velocities of circulation of different monetary instruments, and the use of outside money; on the patterns of saving and trade in paper. Three stages of financial development are identified. (JEL: E41, E43, E44, E51, O16, O42) Copyright (c) 2005 The European Economic Association.

Date: 2005
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Persistent link: https://EconPapers.repec.org/RePEc:tpr:jeurec:v:3:y:2005:i:2-3:p:701-713

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