Intermediation in Overlapping Generations Economies PDF Download

Author: Mark Pingle
Publisher:
ISBN:
Category : Intermediation (Finance)
Languages : en
Pages : 21

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Author: Mark Pingle
Publisher:
ISBN:
Category : Equilibrium (Economics)
Languages : en
Pages : 33

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Author: Mark Pingle
Publisher:
ISBN:
Category : Intermediation (Finance)
Languages : en
Pages : 30

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Author: Mark Pingle
Publisher:
ISBN:
Category : Equilibrium (Economics)
Languages : en
Pages : 58

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Author: Ernst Baltensperger
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ISBN:
Category :
Languages : en
Pages : 27

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Author: Fabrizio Mattesini
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Category :
Languages : en
Pages : 0

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We consider a simple overlapping generations economy where the behavior of intermediaries, in a market characterized by asymmetric information and moral hazard, may give rise to cyclical equilibria. When capital increases output and savings also increase and therefore more capital will be available in the following period. At the same time, however, the higher supply of of savings leads to a decrease in the deposit interest rate and this will induce intermediaries to decrease the number of firms that are monitored. A larger number of firms will select low quality projects and, because of this, less capital will be produced in the following period. For some parameter values this second effect may prevail over the first one and the stock of capital in period t+1 may actually be lower than the stock of capital in period t. The model provides a rigorous interpretation of the view associated with Hyman Minsky [18], Charles Kindleberger [16], and Henry Kaufman [15], according to which expansions come to an inevitable end because of excessive or ill-considered lending that took place during the boom.

Author: Juan Mario Esteban
Publisher:
ISBN:
Category : Equilibrium (Economics)
Languages : en
Pages : 382

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Author: Alejandro Gaytan
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ISBN:
Category :
Languages : en
Pages : 47

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This paper presents empirical support for the existence of wealth effects in the contribution of financial intermediation to economic growth, and offers a theoretical explanation for these effects. Using GMM dynamic panel data techniques applied to study the growth-promoting effects of financial intermediation, we show that the exogenous contribution of financial development on economic growth has different effects for different levels of income per capita. We find that this contribution is generally increasing with the level of income per capita of the economy, up to a relatively high level of income. This contribution is consistently lower for poor countries; and for some low levels of income per capita it can be negative. We provide a model to account for these wealth effects. The model is a overlapping generations growth model where financial intermediaries implement liquidity risk sharing among depositors. We show that at early stages of economic development, a bank can increase welfare of its depositors only at the cost of lowering investment and growth. However, once the economy has crossed certain wealth threshold, the liquidity role of banks becomes unambiguously growth enhancing. As wealth increases, banks offer improving liquidity insurance, and higher growth; however, for high levels of wealth, growth generated by financial intermediation declines as the economy attains the optimal level of consumption risk sharing.

Author: Gilles Saint-Paul
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ISBN:
Category :
Languages : en
Pages : 0

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This paper analyzes the impact of public debt on financial efficiency in an overlapping-generations model. We argue that public debt may reduce intermediation costs by increasing the collateral of entrepreneurs. This effect is stronger, the stronger the non-Ricardian component of public debt, i.e. the more it is associated with intergenerational redistribution. This effect can be interpreted as future generations acting as a guarantee for the loans provided to the entrepreneurs of the current generation. Furthermore, multiple growth paths may arise as low taxes increase private collateral, which in turn boosts growth via financial efficiency, while higher growth allows to maintain the same debt/GDP ratio with reduced taxes.

Author: Sudipto Bhattacharya
Publisher:
ISBN: 9780199243068
Category : Credit
Languages : en
Pages : 934

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Developments in theories of financial markets and institutions, using the tools of the economics of uncertainty and of contracts, as well as results in game theory, have, over the last two decades, constituted an exciting and burgeoning field of research. This collection of readings drawstogether highlights of the 'second generation' literature in this area, emphasizing the theoretical, institutional, and policy-oriented regulatory implications of some of the key modelling techniques in the field.The collection divides into seven sections covering the monitoring role of banks and other intermediaries; liquidity demand and the role of banks and the government; bank runs and financial crises; bank regulation; inter-bank competition and bank--firm relationships; comparative financial systems;and imperfect credit markets and the macroeconomy. Each section comprises four articles previously published in top-ranking economics and finance journals, plus a discussion by a prominent scholar, who provides a synthesis and critique of the literature, and suggests promising directions for futureresearch and application of results.