Growth and financial liberalization under capital collateral constraints: The striking case of the stochastic AK model with CARA preferences
We consider a small-open, collateral-constrained AK economy. We show that the combination of CARA preferences and uncertainty on capital inflows generates long-term growth while the deterministic counterpart does not: long-term growth is entirely driven by precautionary savings, and the asymptotic g...
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| Veröffentlicht in: | Economics letters 2014-02, Vol.122 (2), p.303-307 |
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| container_title | Economics letters |
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| creator | Boucekkine, R. Fabbri, G. Pintus, P. |
| description | We consider a small-open, collateral-constrained AK economy. We show that the combination of CARA preferences and uncertainty on capital inflows generates long-term growth while the deterministic counterpart does not: long-term growth is entirely driven by precautionary savings, and the asymptotic growth rate of the expected capital stock is increasing in both the risk magnitude and the Arrow–Pratt absolute risk aversion parameters.
•We consider a small-open, collateral-constrained AK economy.•CARA preferences and uncertainty on capital inflows generates long-term growth.•Long-term growth is entirely driven by precautionary savings.•Growth rate is increasing in the risk magnitude and in the risk aversion parameters.•More financially integrated economies experience lower consumption growth volatility. |
| doi_str_mv | 10.1016/j.econlet.2013.12.009 |
| format | Article |
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•We consider a small-open, collateral-constrained AK economy.•CARA preferences and uncertainty on capital inflows generates long-term growth.•Long-term growth is entirely driven by precautionary savings.•Growth rate is increasing in the risk magnitude and in the risk aversion parameters.•More financially integrated economies experience lower consumption growth volatility.</description><identifier>ISSN: 0165-1765</identifier><identifier>EISSN: 1873-7374</identifier><identifier>DOI: 10.1016/j.econlet.2013.12.009</identifier><language>eng</language><publisher>Amsterdam: Elsevier B.V</publisher><subject>Capital flow ; Capital stock ; CARA preferences ; Collateral ; Collateral constraints ; Economics and Finance ; Financial liberalization ; Growth ; Growth rate ; Growth rates ; Humanities and Social Sciences ; Precautionary savings ; Risk aversion ; Savings ; Stochastic models ; Studies ; Uncertainty</subject><ispartof>Economics letters, 2014-02, Vol.122 (2), p.303-307</ispartof><rights>2013 Elsevier B.V.</rights><rights>Copyright Elsevier Science Ltd. Feb 2014</rights><rights>Distributed under a Creative Commons Attribution 4.0 International License</rights><lds50>peer_reviewed</lds50><oa>free_for_read</oa><woscitedreferencessubscribed>false</woscitedreferencessubscribed><citedby>FETCH-LOGICAL-c515t-7d741500399993adfd854ae36063f4466500306d1cd94c4bd3a0a3d7ab46d7e3</citedby><cites>FETCH-LOGICAL-c515t-7d741500399993adfd854ae36063f4466500306d1cd94c4bd3a0a3d7ab46d7e3</cites><orcidid>0000-0003-2263-0655 ; 0000-0002-8601-7115 ; 0000-0003-3316-8929</orcidid></display><links><openurl>$$Topenurl_article</openurl><openurlfulltext>$$Topenurlfull_article</openurlfulltext><thumbnail>$$Tsyndetics_thumb_exl</thumbnail><linktohtml>$$Uhttps://dx.doi.org/10.1016/j.econlet.2013.12.009$$EHTML$$P50$$Gelsevier$$H</linktohtml><link.rule.ids>230,314,780,784,885,3548,27923,27924,45994</link.rule.ids><backlink>$$Uhttps://amu.hal.science/hal-01463906$$DView record in HAL$$Hfree_for_read</backlink></links><search><creatorcontrib>Boucekkine, R.</creatorcontrib><creatorcontrib>Fabbri, G.</creatorcontrib><creatorcontrib>Pintus, P.</creatorcontrib><title>Growth and financial liberalization under capital collateral constraints: The striking case of the stochastic AK model with CARA preferences</title><title>Economics letters</title><description>We consider a small-open, collateral-constrained AK economy. We show that the combination of CARA preferences and uncertainty on capital inflows generates long-term growth while the deterministic counterpart does not: long-term growth is entirely driven by precautionary savings, and the asymptotic growth rate of the expected capital stock is increasing in both the risk magnitude and the Arrow–Pratt absolute risk aversion parameters.
•We consider a small-open, collateral-constrained AK economy.•CARA preferences and uncertainty on capital inflows generates long-term growth.•Long-term growth is entirely driven by precautionary savings.•Growth rate is increasing in the risk magnitude and in the risk aversion parameters.•More financially integrated economies experience lower consumption growth volatility.</description><subject>Capital flow</subject><subject>Capital stock</subject><subject>CARA preferences</subject><subject>Collateral</subject><subject>Collateral constraints</subject><subject>Economics and Finance</subject><subject>Financial liberalization</subject><subject>Growth</subject><subject>Growth rate</subject><subject>Growth rates</subject><subject>Humanities and Social Sciences</subject><subject>Precautionary savings</subject><subject>Risk aversion</subject><subject>Savings</subject><subject>Stochastic models</subject><subject>Studies</subject><subject>Uncertainty</subject><issn>0165-1765</issn><issn>1873-7374</issn><fulltext>true</fulltext><rsrctype>article</rsrctype><creationdate>2014</creationdate><recordtype>article</recordtype><recordid>eNqFkc-O0zAQxiMEEmXhEZAscYFDgif-13BBVQW7iEpIqHfLtSfUJbWL7e5qeQYeGoeuOHDBF9szvxl7vq9pXgLtgIJ8e-jQxjBh6XoKrIO-o3R41CxgqVirmOKPm0XlRAtKiqfNs5wPlEI_KLFofl2neFf2xARHRh9MsN5MZPI7TGbyP03xMZBzcJiINSdfatLGaTJlztdjyCUZH0p-R7Z7JPXmv_vwrcIZSRxJ-ROMdm9y8ZasPpNjdDiRO18fXa--rsgp4YgJg8X8vHkyminji4f9qtl-_LBd37SbL9ef1qtNawWI0iqnOAhK2VAXM250S8ENMkklGzmXcs5R6cC6gVu-c8xQw5wyOy6dQnbVvLm03ZtJn5I_mnSvo_H6ZrXRc4wCl2yg8hYq-_rCnlL8ccZc9NFni1WBgPGcNYgeGGNVzYq--gc9xHMKdRANfOBLAQrmhuJC2RRzrrP__QFQPdupD_rBTj3bqaHX1c5a9_5Sh1WYW49JZ-tn1ZxPaIt20f-nw29unKug</recordid><startdate>20140201</startdate><enddate>20140201</enddate><creator>Boucekkine, R.</creator><creator>Fabbri, G.</creator><creator>Pintus, P.</creator><general>Elsevier B.V</general><general>Elsevier Science Ltd</general><general>Elsevier</general><scope>AAYXX</scope><scope>CITATION</scope><scope>8BJ</scope><scope>FQK</scope><scope>JBE</scope><scope>1XC</scope><scope>BXJBU</scope><orcidid>https://orcid.org/0000-0003-2263-0655</orcidid><orcidid>https://orcid.org/0000-0002-8601-7115</orcidid><orcidid>https://orcid.org/0000-0003-3316-8929</orcidid></search><sort><creationdate>20140201</creationdate><title>Growth and financial liberalization under capital collateral constraints: The striking case of the stochastic AK model with CARA preferences</title><author>Boucekkine, R. ; Fabbri, G. ; Pintus, P.</author></sort><facets><frbrtype>5</frbrtype><frbrgroupid>cdi_FETCH-LOGICAL-c515t-7d741500399993adfd854ae36063f4466500306d1cd94c4bd3a0a3d7ab46d7e3</frbrgroupid><rsrctype>articles</rsrctype><prefilter>articles</prefilter><language>eng</language><creationdate>2014</creationdate><topic>Capital flow</topic><topic>Capital stock</topic><topic>CARA preferences</topic><topic>Collateral</topic><topic>Collateral constraints</topic><topic>Economics and Finance</topic><topic>Financial liberalization</topic><topic>Growth</topic><topic>Growth rate</topic><topic>Growth rates</topic><topic>Humanities and Social Sciences</topic><topic>Precautionary savings</topic><topic>Risk aversion</topic><topic>Savings</topic><topic>Stochastic models</topic><topic>Studies</topic><topic>Uncertainty</topic><toplevel>peer_reviewed</toplevel><toplevel>online_resources</toplevel><creatorcontrib>Boucekkine, R.</creatorcontrib><creatorcontrib>Fabbri, G.</creatorcontrib><creatorcontrib>Pintus, P.</creatorcontrib><collection>CrossRef</collection><collection>International Bibliography of the Social Sciences (IBSS)</collection><collection>International Bibliography of the Social Sciences</collection><collection>International Bibliography of the Social Sciences</collection><collection>Hyper Article en Ligne (HAL)</collection><collection>HAL-SHS: Archive ouverte en Sciences de l'Homme et de la Société</collection><jtitle>Economics letters</jtitle></facets><delivery><delcategory>Remote Search Resource</delcategory><fulltext>fulltext</fulltext></delivery><addata><au>Boucekkine, R.</au><au>Fabbri, G.</au><au>Pintus, P.</au><format>journal</format><genre>article</genre><ristype>JOUR</ristype><atitle>Growth and financial liberalization under capital collateral constraints: The striking case of the stochastic AK model with CARA preferences</atitle><jtitle>Economics letters</jtitle><date>2014-02-01</date><risdate>2014</risdate><volume>122</volume><issue>2</issue><spage>303</spage><epage>307</epage><pages>303-307</pages><issn>0165-1765</issn><eissn>1873-7374</eissn><abstract>We consider a small-open, collateral-constrained AK economy. We show that the combination of CARA preferences and uncertainty on capital inflows generates long-term growth while the deterministic counterpart does not: long-term growth is entirely driven by precautionary savings, and the asymptotic growth rate of the expected capital stock is increasing in both the risk magnitude and the Arrow–Pratt absolute risk aversion parameters.
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| fulltext | fulltext |
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| ispartof | Economics letters, 2014-02, Vol.122 (2), p.303-307 |
| issn | 0165-1765 1873-7374 |
| language | eng |
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| source | ScienceDirect Journals (5 years ago - present) |
| subjects | Capital flow Capital stock CARA preferences Collateral Collateral constraints Economics and Finance Financial liberalization Growth Growth rate Growth rates Humanities and Social Sciences Precautionary savings Risk aversion Savings Stochastic models Studies Uncertainty |
| title | Growth and financial liberalization under capital collateral constraints: The striking case of the stochastic AK model with CARA preferences |
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