Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/173872
Authors: 
Granda Carvajal, Catalina
Hamann S., Franz A.
Tamayo, Cesar E.
Year of Publication: 
2017
Series/Report no.: 
IDB Working Paper Series IDB-WP-808
Abstract: 
In this paper, we build a heterogeneous agents-dynamic general equilibrium model wherein saving constraints interact with credit constraints. Saving constraints in the form of fixed costs to use the financial system lead households to seek informal saving instruments (cash) and result in lower aggregate saving. Credit constraints induce misallocation of capital across producers that in turn lowers output, productivity, and the return to formal financial instruments. We calibrate the model using survey data from a developing country where informal saving and credit constraints are pervasive. Our quantitative results suggest that completely removing saving and credit constraints can have large effects on saving rates, output, TFP, and welfare. Moreover, we note that a sizable fraction of these gains can be more easily attained by a mix of moderate reforms that lower both types of frictions than by a strong reform on either front. - See more at: https://publications.iadb.org/handle/11319/8283#sthash.gKLOykIi.dpuf
Subjects: 
saving constraints
credit constraints
financial inclusion
misallocation
saving
formal and informal financial markets
JEL: 
E21
E44
G21
O11
O16
Persistent Identifier of the first edition: 
Creative Commons License: 
http://creativecommons.org/licenses/by-nc-nd/3.0/igo/legalcode
Document Type: 
Working Paper

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