Hsu, Sara and Li, Jianjun and Qi, Zhao (2012): “Ideal” financial development and financial overaccumulation.
This is the latest version of this item.
Download (439Kb) | Preview
In this paper, we examine whether there is an “ideal” level of financial development, somewhere between financial capital overaccumulation and financial capital underaccumulation. We construct a model that incorporates shadow banking or speculative financial development, financial deepening, and production. As financial deepening grows, speculation may grow in step. Where the speculative spread is larger than what the level of deepening and production can bear, financial instability may occur. Hence financial deepening may promote or constrain economic development.
|Item Type:||MPRA Paper|
|Original Title:||“Ideal” financial development and financial overaccumulation|
|Keywords:||financial deepening, economic growth, profit rate, overaccumulation|
|Subjects:||O - Economic Development, Technological Change, and Growth > O4 - Economic Growth and Aggregate Productivity > O40 - General
G - Financial Economics > G0 - General > G01 - Financial Crises
C - Mathematical and Quantitative Methods > C6 - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling > C60 - General
|Depositing User:||Sara Hsu|
|Date Deposited:||03. Oct 2012 14:49|
|Last Modified:||17. May 2013 00:27|
1. Aghion, Philippe and Peter Howitt. 1998. Endogenous Growth Theory. Cambridge, MA: MIT Press.
2. Arestis, Philip and Panicos Demetriades. 1997. Financial Development and Economic Growth: Assessing the Evidence. The Economic Journal 107(442): 783-799.
3. Arestis, Philip, Panicos Demetriades and Kul B. Luintel. 2001. Financial Development and Economic Growth: The Role of Stock Markets. Journal of Money, Credit and Banking 33(1): 16-41.
4. Beck, Thortsen and Asli Demirgüç-Kunt, "Financial Institutions and Markets Across Countries and over Time: Data and Analysis", World Bank Policy Research Working Paper No. 4943, May 2009
5. Beck, Thorsten, Ross Levine, Norman Loyaza. 2000. Finance and the Sources of Growth. Journal of Financial Economics 58: 261– 300.
6. Bello, Walden. 2006. The Capitalist Conjuncture: Overaccumulation, Financial Crises, and the Retreat from Globalization. Third World Quarterly 27(8): 1345 – 1367.
7. Bencivenga, Valerie R. and Bruce D. Smith. 1992. Deficits, Inflation, and the Banking System in Developing Countries: The Optimal Degree of Financial Repression. Oxford Economic Papers, New Series 44(4), Special Issue on Financial Markets, Institutions and Policy: 767-790.
8. Besomi, Daniele. 2001. Harrod’s Dynamics and the Theory of Growth: the Story of a Mistaken Attribution. Cambridge Journal of Economics 25: 79-96.
9. Cass, David. 1965. Optimum Growth in an Aggregative Model of Capital Accumulation. Review of Economic Studies 32: 233-240.
10. Christopoulos, Dimitris K. and Efthymios G. Tsionas. 2004. Financial Development and Economic Growth: Evidence from Panel Unit Root and Cointegration Tests. Journal of Development Economics 73: 55– 74.
11. Demirguc-Kunt, Asli and Ross Levine. 2001. Financial Structure and Economic Growth A Cross-Country Comparison of Banks, Markets, and Development. Cambridge: MIT Press.
12. Diamond, Douglas W. and Peter H. Dybvig. 1983. Bank Runs, Deposit Insurance, and Liquidity. Journal of Political Economy 91(3): 401–19.
13. Diamond, Peter A. 1965. National Debt in a Neoclassical Growth Model. American Economic Review 55: 1126-1150.
14. Eichberger, Jürgen and Ian R. Harper. 1997. Financial Economics. New York: Oxford University Press.
15. Fritz, Richard. 1984. Time Series Evidence of the Causal Relationship between Financial Deepening and Economic Development. Journal of Economic Development 9(1): 91-111.
16. Garegnani, P. 1984. Value and Distribution in the Classical Economists and Marx. Oxford Economic Papers 36(2): 291-325.
17. Goldsmith, Raymond W. 1969. Financial Structure and Development. New Haven: Yale University Press.
18. Gordon, M.J. 1989. Corporate Finance under the MM Theorems. Financial Management 18(2): 19-28.
19. Grossman, Gene M. and Elhanan Helpman. 1991. Quality Ladders in the Theory of Growth. Review of Economic Studies 58(1): 43-61.
20. Gurley, John G. and Edward S. Shaw. 1960. Money in a Theory of Finance. Washington, DC: Brookings Institution.
21. Harris, Donald J. 1970. Heterogeneous Capital, The Production Function and the Theory of Distribution. Review of Economic Studies 37: 407-36.
22. Ireland, Peter N. 1994. Money and Growth: An Alternative Approach. American Economic Review 84(1): 47-65.
23. Kaldor, Nicholas. 1977. Economic Theory and Growth Theory. Chapter in Economics and Human Welfare, ed. M.J. Boskin. New York: Academic Press.
24. Keynes, John Maynard. 1936. The General Theory of Employment, Interest and Money. London: Macmillan.
25. King, Robert G. and Ross Levine. 1993a. Financial Intermediation and Economic Development, in Financial intermediation in the construction of Europe. Eds.: Colin Mayer and Xavier Vives. London: Centre for Economic Policy Research: 156-89.
26. King, Robert G. and Ross Levine. 1993b. Finance and Growth: Schumpeter Might Be Right. Quarterly Journal of Economics 108(3): 717-37.
27. King, Robert G. and Ross Levine. 1993c. Finance, Entrepreneurship and Growth: Theory and Evidence. Journal of Monetary Economics 32(3): 513-42.
28. Klein, Michael W. and Giovanni Olivei. 1999. Capital Account Liberalization, Financial Depth and Economic Growth. NBER Working Paper No. 7384.
29. Koopmans, Tjalling C. 1965. On the Concept of Optimal Economic Growth. In The Economic Approach to Development Planning. Amsterdam: Elsevier.
30. Levine, Ross. 1997. Financial Development and Economic Growth: Views and Agenda. Journal of Economic Literature 35(2): 688-726.
31. Levine, Ross, Norman Loyaza, and Thorsten Beck. 2000. Financial Intermediation and Growth: Causality and Causes. Journal of Monetary Economics 46: 31– 71.
32. Lucas, Robert E. 1988. On the Mechanics of Economic Development. Journal of Monetary Economics 22: 3- 42.
33. McKinnon, Ronald I. 1973. Money and Capital in Economic Development. Washington, DC: Brookings Institution.
34. McKinnon, Ronald I. 1982. "The Order of Economic Liberalization: Lessons from Chile and Argentina", Carnegie-Rochester Conference Series on Public Policy 17: 159-86.
35. Minsky, Hyman. 1991. Financial Crises: Systemic or Idiosycratic. Levy Institute Working Paper No. 51.
36. Modligliani, Franco and Merton Miller. 1958. The Cost of Capital, Corporate Finance and the Theory of Investment. American Economic Review 48: 262-97.
37. Phelps, Edmund S. 1961. The Golden Rule of Accumulation. American Economic Review 51: 638-43.
38. Phelps, Edmund S. 1962. The New View of Investment: A Neoclassical Analysis. Quarterly Journal of Economics 76: 548-67.
39. Phelps, Edmund S. 1965. Second Essay on the Golden Rule of Accumulation. American Economic Review 55: 783-814.
40. Ramsey, Frank P. 1928. A Mathematical Theory of Saving. Economic Journal 38: 543-559.
41. Romer, David. 2001. Advanced Macroeconomics. New York: McGraw Hill.
42. Romer, Paul. 1986. Increasing Returns and Long-Run Growth. Journal of Political Economy 94: 1002-1037.
43. Roubini, Nouriel and Xavier Sala-i-Martin. 1992. Financial Repression and Economic Growth. Journal of Development Economics 39(1): 5-30.
44. Shaw, Edward. 1973. Financial Deepening in Economic Development. New York: Oxford University Press.
45. Stiglitz, Joseph E. 1969. A Re-examination of the Modigliani-Miller Theorem. American Economic Review 59: 784-93.
Available Versions of this Item
“Ideal” financial development and financial overaccumulation. (deposited 11. Apr 2012 14:54)
- “Ideal” financial development and financial overaccumulation. (deposited 03. Oct 2012 14:49) [Currently Displayed]