Distinguishing limited commitment from moral hazard in models of growth with inequality
By: Anna L. Paulson, Robert Townsend.
Contributors: Townsend, Robert M., 1948-
Series: Working paper series ;; WP-2003-06; Working paper series (Federal Reserve Bank of Chicago. Research Dept. : Online) ;; WP-2003-06.
Publisher: Federal Reserve Bank of Chicago
Published: 2003
Place of publication: [Chicago, Ill.]
Language: eng
Format: Electronic resource
Description: "We use non-parametric, reduced form and structural techniques to distin-guish the micro-economic foundations of two models of growth with increasing inequality using new data from rural and semi-urban households in Thailand.  We estimate a limited commitment model that is similar to Evans and Jovanovic (1989) and a moral hazard model that is an extension of Aghion and Bolton (1996).  Both models emphasize the role of occupational choice and financial constraints.  While the models share many implications, they are distinguished by their assumptions about the nature of financial market imperfections.  We provide structural and reduced form evidence that the dominant source of credit market imperfections varies with wealth.  For poorer households limited commit-ment is the dominant concern.  However, as wealth increases moral hazard gains importance.  These findings provide a rationale for important characteristics of the financial environment in Thailand"--Federal Reserve Bank of Chicago web site.
Notes: Also available in print.
Includes bibliographical references.
Title from PDF file as viewed on 10/4/2004.
System requirements: Adobe Acrobat Reader.
Mode of access: World Wide Web.