Credit rationing, profit accumulation and economic growth [An article from: Economics Letters]

This digital document is a journal article from Economics Letters, published by Elsevier in 2004. The article is delivered in HTML format and is available in your Amazon.com Media Library immediately after purchase. You can view it with any web browser.

Description:
This paper studies how credit rationing affects endogenous growth when capital and debt are related to the firm's internal net worth, taken as collateral. The accumulation of firm's net worth determines the growth rate of capital and the growth rate of the economy. The relation between growth and interest rate is then negative without requiring convex adjustment costs on investment.