Distinguishing constraints on financial inclusion and their impact on GDP, TFP, and the distribution of income
Name
SSRN-id3483633.pdf
Description
Accepted version
Size
1.42 MB
Format
Adobe PDF
Checksum (MD5)
188f4e9d730e5a4dda024d8b872c8e30
Author(s)
Townsend, Robert
Date Issued
January 2020
Journal
Journal of Monetary Economics
Publisher
Elsevier BV
Citation
Dabla-Norris, Era et al. “Distinguishing constraints on financial inclusion and their impact on GDP, TFP, and the distribution of income.” Journal of Monetary Economics, 117 (January 2021): 1-18 © 2020 The Author(s)
Version
Author's final manuscript
Abstract
A general equilibrium model featuring multiple realistic sources of financial frictions is developed to study how different constraints interact in equilibrium. We highlight, distinguish, and evaluate their differential impacts and rich interactions. The economic impact of financial inclusion policies in an economy depends not only on which constraint is alleviated, but also on the tightness of other constraints. Policy instruments should target the most binding constraint, which likely varies across countries. Moreover, there are important tradeoffs between financial inclusion, GDP, and the distribution of income. The transitional dynamics also differ from those in steady states. Policy makers should consider both.
MIT Department
Massachusetts Institute of Technology. Department of Economics
Terms of Use
Creative Commons Attribution-NonCommercial-NoDerivs License
Persistent DSpace Link
DOI of Published Version
https://doi.org/10.1016/J.JMONECO.2020.01.003
