Credit Constraints and Economic Growth in a Dual Economy

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dc.contributor.authorSkott, Peter
dc.contributor.authorGómez-Ramírez, Leopoldo
dc.contributor.departmentUniversity of Massachusetts Amherst
dc.contributor.departmentUniversidad del Norte - Colombia
dc.date2023-09-23T18:31:03.000
dc.date.accessioned2024-04-26T16:31:02Z
dc.date.available2017-08-17T00:00:00Z
dc.date.issued2017
dc.description.abstractPervasive credit constraints have been seen as major sources of slow growth in developing economies. This paper clarifies a mechanism through which an inefficient financial system can reduce productivity growth. Using a two-sector model, second, we examine the implications for employment and the distribution of income. Both classical and Keynesian versions of the model are considered; saving decisions are central in the classical version while firms’ investment and pricing decisions take center stage in the Keynesian version. We find that, although boosting the asymptotic rate of growth, a relaxation of credit constraints may reduce the share of the formal sector, increase inequality and underemployment, and have little or no effect on the medium-run rate of growth.
dc.identifier.doi10.7275/10614585
dc.identifier.urihttps://hdl.handle.net/20.500.14394/22205
dc.relation.urlhttps://scholarworks.umass.edu/cgi/viewcontent.cgi?article=1230&context=econ_workingpaper&unstamped=1
dc.rightsUMass Amherst Open Access Policy
dc.source.issue2017-13
dc.source.statuspublished
dc.subjectcredit constraints
dc.subjectproductivity growth
dc.subjectdual economy
dc.subjectunderemployment
dc.subjectincome distribution
dc.subjectEconomics
dc.titleCredit Constraints and Economic Growth in a Dual Economy
dc.typeWorking Paper
digcom.contributor.authorisAuthorOfPublication|email:pskott@econs.umass.edu|institution:University of Massachusetts - Amherst|Skott, Peter
digcom.contributor.authorisAuthorOfPublication|email:leopoldog@uninorte.edu.co|institution:Universidad del Norte - Colombia|Gómez-Ramírez, Leopoldo
digcom.identifierecon_workingpaper/229
digcom.identifier.contextkey10614585
digcom.identifier.submissionpathecon_workingpaper/229
dspace.entity.typePublication
relation.isAuthorOfPublication9fbadb4c-714f-4bf3-9344-2ac3851cd2e8
relation.isAuthorOfPublication.latestForDiscovery9fbadb4c-714f-4bf3-9344-2ac3851cd2e8
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