Financial frictions and the persistence of history
Subtitle: a quantitative exploration
By: Francisco J. Buera, Yongseok Shin
Contributors: Shin, Yongseok; National Bureau of Economic Research
Series: NBER working paper series -- working paper 16400; Working paper series (National Bureau of Economic Research : Online) -- working paper no. 16400.
Publisher: National Bureau of Economic Research
Published: 2010
Place of publication: Cambridge, MA
Language: eng
Format: [electronic resource] :
Description: "We quantify the role of financial frictions and the initial misallocation of resources in explaining development dynamics.  Following a reform that triggers efficient reallocation of resources, our model economy with financial frictions converges slowly to the new steady state-it takes twice as long to cover half the distance to the steady state as the neoclassical growth model.  Investment rates and total factor productivity start out low and rise over time.  These model dynamics are endogenously determined by the extent of initial resource misallocation and the degree of financial frictions.  We present data from post-war miracle economies on the evolution of macro aggregates, factor reallocation, and establishment size distribution, which support the aggregate and micro-level implications of our theory"--National Bureau of Economic Research web site.
Notes: Title from PDF file as viewed on 12/16/2010.

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