Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/103039
Authors: 
Kartashova, Katya
Year of Publication: 
2014
Series/Report no.: 
Bank of Canada Working Paper 2014-41
Abstract: 
This paper quantifies the effects of improving public equity markets on macroeconomic aggregates and welfare. I use an open-economy extension of Angeletos (2007), where entrepreneurs face idiosyncratic productivity risk in privately held firms. They can diversify by investing in publicly traded firms, but their operation is costly. These costs can vary across different economies. To quantify the effect of the differences and impose discipline, I parameterize the model using Ecuadorian and Chilean firm-level and aggregate data. Lower equity costs result in improvement of economic aggregates, but have differential welfare effects. Entrepreneurs suffer a loss, while workers gain.
Subjects: 
Financial institutions
Financial markets
Development economics
JEL: 
E44
G11
O11
O16
Document Type: 
Working Paper

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