Interactions between Financial Constraints and Economic Growth

J. Jerónimo; Assis Azevedo; P. C. Neves; M. Thompson

doi:10.1016/j.najef.2023.101943

Interactions between Financial Constraints and Economic Growth

J. Jerónimo, Assis Azevedo, P. C. Neves, M. Thompson

School of Social Sciences

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Abstract

The financial economy and the real economy are interconnected through various, complex, and evolving transmission mechanisms, whose literary coverage is far from comprehensive. In this context, we wish to contribute to the literature on the interactions between financial constraints and economic growth. We introduce financial dynamics in the R&D-based growth literature, by bringing Bernanke, Gertler and Gilchrist’s (1999) informational asymmetries into Romer’s (1990) growth model. With the developed framework, our main goal is to examine if and how such asymmetries impact economic growth. We find that the overall impact of this form of financial constraints on long-term growth is negative.

Original language	English
Article number	101943
Journal	North American Journal of Economics and Finance
Volume	67
Early online date	10 May 2023
DOIs	https://doi.org/10.1016/j.najef.2023.101943
Publication status	Published - Jul 2023

Keywords

Economic growth
Financial constraints

ASJC Scopus subject areas

Economics and Econometrics
Finance

UN SDGs

This output contributes to the following UN Sustainable Development Goals (SDGs)

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title = "Interactions between Financial Constraints and Economic Growth",

abstract = "The financial economy and the real economy are interconnected through various, complex, and evolving transmission mechanisms, whose literary coverage is far from comprehensive. In this context, we wish to contribute to the literature on the interactions between financial constraints and economic growth. We introduce financial dynamics in the R&D-based growth literature, by bringing Bernanke, Gertler and Gilchrist{\textquoteright}s (1999) informational asymmetries into Romer{\textquoteright}s (1990) growth model. With the developed framework, our main goal is to examine if and how such asymmetries impact economic growth. We find that the overall impact of this form of financial constraints on long-term growth is negative.",

keywords = "Economic growth, Financial constraints",

author = "J. Jer{\'o}nimo and Assis Azevedo and Neves, {P. C.} and M. Thompson",

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AU - Jerónimo, J.

AU - Azevedo, Assis

AU - Neves, P. C.

AU - Thompson, M.

N1 - Funding Information: This research has been financed by Portuguese public funds through FCT - Fundação para a Ciência e a Tecnologia, I.P., in the framework of the projects UIDB/04105/2020, UIDB/03182/2020, UIDB/00013/2020 and UIDP/00013/2020. Publisher Copyright: © 2023 The Author(s)

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N2 - The financial economy and the real economy are interconnected through various, complex, and evolving transmission mechanisms, whose literary coverage is far from comprehensive. In this context, we wish to contribute to the literature on the interactions between financial constraints and economic growth. We introduce financial dynamics in the R&D-based growth literature, by bringing Bernanke, Gertler and Gilchrist’s (1999) informational asymmetries into Romer’s (1990) growth model. With the developed framework, our main goal is to examine if and how such asymmetries impact economic growth. We find that the overall impact of this form of financial constraints on long-term growth is negative.

AB - The financial economy and the real economy are interconnected through various, complex, and evolving transmission mechanisms, whose literary coverage is far from comprehensive. In this context, we wish to contribute to the literature on the interactions between financial constraints and economic growth. We introduce financial dynamics in the R&D-based growth literature, by bringing Bernanke, Gertler and Gilchrist’s (1999) informational asymmetries into Romer’s (1990) growth model. With the developed framework, our main goal is to examine if and how such asymmetries impact economic growth. We find that the overall impact of this form of financial constraints on long-term growth is negative.

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KW - Financial constraints

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DO - 10.1016/j.najef.2023.101943

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JF - North American Journal of Economics and Finance

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Interactions between Financial Constraints and Economic Growth

Abstract

Keywords

ASJC Scopus subject areas

UN SDGs

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