Economic development, flow of funds, and the equilibrium interaction of financial frictions
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Author(s)
Moll, Benjamin
Townsend, Robert M.
Zhorin, Victor
Date Issued
March 23, 2018
Journal
Proceedings of the National Academy of Sciences
Publisher
Proceedings of the National Academy of Sciences
Citation
Moll, Benjamin, Robert M. Townsend, and Victor Zhorin. “Economic Development, Flow of Funds, and the Equilibrium Interaction of Financial Frictions.” Proceedings of the National Academy of Sciences 114, no. 24 (June 7, 2017): 6176–6184.
Version
Final published version
Abstract
We use a variety of different datasets from Thailand to study not only the extremes of micro and macro variables but also withincountry flow of funds and labor migration. We develop a general equilibrium model that encompasses regional variation in the type of financial friction and calibrate it to measured variation in regional aggregates. The model predicts substantial capital and labor flows fromrural to urban areas even though these differ only in the underlying financial regime. Predictions for micro variables not used directly provide a model validation. Finally, we estimate the impact of a policy of counterfactual, regional isolationism.
MIT Department
Massachusetts Institute of Technology. Department of Economics
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Article is made available in accordance with the publisher's policy and may be subject to US copyright law. Please refer to the publisher's site for terms of use.
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DOI of Published Version
https://doi.org/10.1073/PNAS.1707055114
