Credit crunches as markov equilibria

Azariadis, Costas; Choi, Kyoung Jin

doi:10.1016/j.jmacro.2013.09.009

Cited by 20 publications

(26 citation statements)

References 16 publications

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“…First, we show that the emerging country always lends to the developed country, as the young of the former country save relatively more in the absence of the pay-as-you-go system 3 . Yet, the pattern of trade in the consumption good does depend on the long-run efficiency of the world economy.…”

Section: Introductionmentioning

confidence: 80%

“…In the OLG model, it is well known that savings are lower in presence of a pay-as-you-go system (see e.g. [3], or [25]). Given w t and r t+1 , we have that:…”

Section: Consumersmentioning

confidence: 99%

“…The argument is the same as for closed economies and relies on the fact that savings can never exceed the wage (see Azariadis [3], p. 84). Since…”

Section: Conclusion and Policy Implicationsmentioning

confidence: 99%

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An OLG model of global imbalances

Eugeni

2015

Journal of International Economics

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The full-text may be used and/or reproduced, and given to third parties in any format or medium, without prior permission or charge, for personal research or study, educational, or not-for-pro t purposes provided that:• a full bibliographic reference is made to the original source • a link is made to the metadata record in DRO • the full-text is not changed in any way The full-text must not be sold in any format or medium without the formal permission of the copyright holders.Please consult the full DRO policy for further details. AbstractIn this paper, we investigate the relationship between East Asian countries' high propensity to save and global imbalances in a two-country OLG model with production. The saving behavior of emerging economies and capital outflows to the United States can be attributed to their poor pay-as-you-go systems. The model predicts that emerging countries run a trade surplus only as long as the long-run growth rate of the economy is higher than the real interest rate (capital overaccumulation case). The low real interest rates in the US is therefore evidence in favour of the hypothesis that there is a "global saving glut" in the world economy. The model can explain why the US current account deteriorated gradually and only in the late 1990s, although the net foreign asset position had already turned negative in the early 1980s. Finally, the analysis also implies that an improvement of the pay-as-you-go system in China would have the effect of reducing the imbalances. In accordance with the theory, we find that the higher is the percentage of the working population covered by the pay-as-you-go system the lower are savings and the current account balance in a cross-section of countries.

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Section: Introductionmentioning

confidence: 80%

“…In the OLG model, it is well known that savings are lower in presence of a pay-as-you-go system (see e.g. [3], or [25]). Given w t and r t+1 , we have that:…”

Section: Consumersmentioning

confidence: 99%

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An OLG model of global imbalances

Eugeni

2015

Journal of International Economics

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“…Contrary to more conventional approaches that view exogenous (demand and/or supply) shocks as the initial impulse sources behind fluctuations in major economic variables, there is another strand of literature arguing that there is no reason to restrict attention to such exogenous processes as the generating causes of economic volatility. 1 Instead, its impulse source may be embedded in the deep structural characteristics that shape the economy's dynamics and may lead economic variables to display fluctuations, either through damped oscillations; or through periodic orbits that are of a more permanent nature; or through stochastic economic fluctuations generated by purely extrinsic uncertainty (i.e., sunspots) rather than shocks to such fundamentals as preferences or technologies. Analyses on this strand of literature include the papers by Grandmont (1985); Benhabib and Nishimura (1985);…”

Section: Introductionmentioning

confidence: 99%

Endogenous Market Structure, Occupational Choice, and Growth Cycles

Varvarigos

Gil‐Moltó

2014

Macroecon. Dynam.

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We model an industry that supplies intermediate goods in a growing economy. Agents can choose whether to provide labour or to become firm owners and compete in the industry.The idea that entry is determined through occupational choice has major implications for the economy's dynamics. Particularly, the results show that economic dynamics are governed by endogenous volatility in the determination of both the number of industry entrants and in the growth rate of output. Consequently, we argue that occupational choice and the structural characteristics of the endogenous market structure can act as both the impulse source and the propagation mechanism of economic fluctuations.

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“…Diamond (1965) considered public debt in an overlapping-generations model. Samuelson (1958) and Azariadis (1993) examined whether a fiscal policy that brings about fiscal deficit is sustainable or not in terms of fiscal management. Sustainability depends on the primary fiscal deficit and on the gap separating interest rates and the population growth rate.…”

Section: Introductionmentioning

confidence: 99%

Public Debt, Child Allowances and Pension Benefits with Endogenous Fertility

Yasuoka

Miyake

2013

Economics

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The public debt stock in some economically developed countries continues to increase because of a lack of tax revenues and the concomitant burdens of social security. Many of those countries suffer from lower birth rates and consequently, have fewer children. Child allowances might be an effective way to increase fertility, leading to higher future tax revenues through an increase in the number of younger people. In this paper, the authors examine whether or not child allowances reduce the public debt stock as a share of GDP in an economy with a pension system. As long as a non-negative debt policy is adopted in the long run, child allowances financed by bonds always increase the public debt stock as a share of GDP. JEL G23 H55 J13

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Credit crunches as markov equilibria

Cited by 20 publications

References 16 publications

An OLG model of global imbalances

An OLG model of global imbalances

Endogenous Market Structure, Occupational Choice, and Growth Cycles

Public Debt, Child Allowances and Pension Benefits with Endogenous Fertility

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