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

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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: CARA preferences; CARA preferences; Collateral constraints; Financial liberalization; Growth; Precautionary savings (search for similar items in EconPapers)
Date: 2014-02
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Citations: View citations in EconPapers (22)

Published in Economics Letters, 2014, 122 (2), pp.303--307. ⟨10.1016/j.econlet.2013.12.009⟩

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Related works:
Journal Article: 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:hal:journl:hal-01463906

DOI: 10.1016/j.econlet.2013.12.009

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