Year 2011,
Volume: 3 Issue: 1, 75 - 84, 01.06.2011
Abstract
This paper examines the relationship between reserve requirements, interest rate
taxes, and long-term growth. I present a model which shows that the government
might repress the financial sector as this is the easy way of channelling resources
to productive sectors.
In this endogenous model, I employ the government input in the firm production
function. The implications of the model are confirmed in that, an increase in
reserve requirements and interest rate controls have two different reverse effects
on growth - one is the negative effect on the financial sector. The other is a
growth enhancing effect from the effective public spending on the real sectors.
Keywords
References
- Basu, Parantap(2001), “Reserve Ratio, Seigniorage and Growth”, Journal of
- Macroeconomics, Vol.23, No.3,pp.397-416. Bartolini, Leonardo and Allan Drazen (1997a), “Capital-Account Liberalization as a Signal”, American Economic Review, Vol. 87, pp. 138–54.
- Cho, Yoon-Je(1989), “Finance and Development: The Korean Approach”, Oxford
- Review of Economic Policy, Vol. 5, pp. 88-102. Diaz-Gimenez, Javier, Edward C. Prescott, Terry Fitzgerald and Fernando Alvarez(1992), “Banking in Computable General Equilibrium Economies.”,
- Journal of Economic Dynamics and Control, Vol.16, pp.533-559. Prasad,Eswar S, Kenneth Rogoff, Shang-Jin Wei and M.Ayhan Kose (2003),
- “Effects of Financial Globalization on Developing Countries: Some Empirical Evidence”, IMF Staff Papers, Vol.50, pp119-142. Roubini, Nouriel and Xavier Sala-i-Martin (1994), “A growth model of inlfation, tax evasion, and financial repression”, Journal of Monetary Economics, Vol.35,pp.275-301.
- McKinnon, Ronald I (1973), Money and Capital in Economic Development ,
- Washington, DC: Brookings Institution.
Year 2011,
Volume: 3 Issue: 1, 75 - 84, 01.06.2011
Abstract
References
- Basu, Parantap(2001), “Reserve Ratio, Seigniorage and Growth”, Journal of
- Macroeconomics, Vol.23, No.3,pp.397-416. Bartolini, Leonardo and Allan Drazen (1997a), “Capital-Account Liberalization as a Signal”, American Economic Review, Vol. 87, pp. 138–54.
- Cho, Yoon-Je(1989), “Finance and Development: The Korean Approach”, Oxford
- Review of Economic Policy, Vol. 5, pp. 88-102. Diaz-Gimenez, Javier, Edward C. Prescott, Terry Fitzgerald and Fernando Alvarez(1992), “Banking in Computable General Equilibrium Economies.”,
- Journal of Economic Dynamics and Control, Vol.16, pp.533-559. Prasad,Eswar S, Kenneth Rogoff, Shang-Jin Wei and M.Ayhan Kose (2003),
- “Effects of Financial Globalization on Developing Countries: Some Empirical Evidence”, IMF Staff Papers, Vol.50, pp119-142. Roubini, Nouriel and Xavier Sala-i-Martin (1994), “A growth model of inlfation, tax evasion, and financial repression”, Journal of Monetary Economics, Vol.35,pp.275-301.
- McKinnon, Ronald I (1973), Money and Capital in Economic Development ,
- Washington, DC: Brookings Institution.
There are 8 citations in total.
Details
| Other ID | JA35JN35ZE |
|---|---|
| Journal Section | Articles |
| Authors | |
| Publication Date | June 1, 2011 |
| Published in Issue | Year 2011 Volume: 3 Issue: 1 |