Credit Constraints and Growth in a Global Economy
Credit Constraints and Growth in a Global Economy Nicolas Coeurdacier St´ephane Guibaud SciencesPo Paris and CEPR SciencesPo Paris Keyu Jin London School of Economics April 3, 2015∗ Abstract We show that in an open-economy OLG model, the interaction between growth differentials and household credit constraints—more severe in fast-growing countries— can explain three prominent global trends: a divergence in private saving rates between advanced and emerging economies, large net capital outflows from the latter, and a sustained decline in the world interest rate. Micro-level evidence on the evolution of age-saving profiles in the U.S. and China corroborates our mechanism. Quantitatively, our model explains about a third of the divergence in aggregate saving rates, and a significant portion of the variations in age-saving profiles across countries and over time. JEL Classification: F21, F32, F41 Key Words: Household Credit Constraints, Age-Saving Profiles, International Capital Flows, Allocation Puzzle. ∗We thank three anonymous referees, Philippe Bacchetta, Fernando Broner, Christopher Carroll, Andrew Chesher, Emmanuel Farhi, Pierre-Olivier Gourinchas, Dirk Krueger, Philip Lane, Marc Melitz, Fabrizio Perri, Tom Sargent, Cedric Tille, Eric van Wincoop, Dennis Yao, Michael Zheng, seminar participants at Banque de France, Bocconi, Boston University, Cambridge, CREST, CUHK, the European Central Bank, the Federal Reserve Bank of New York, GIIDS (Geneva), Harvard Kennedy School, Harvard University, HEC Lausanne, HEC Paris, HKU, INSEAD, LSE, MIT, Rome, Toulouse, UCLA, University of Minnesota, Yale, and con- ference participants at the Barcelona GSE Summer Forum, the NBER IFM Summer Institute (2011), the Society for Economic Dynamics (Ghent), Tsinghua Macroeconomics workshop, and UCL New Developments in Macroeconomics workshop (2012) for helpful comments.
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