Business Intelligence

Firm Heterogeneity, Credit Constraints, And Endogenous Growth

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Executive Summary

This paper is concerned with the role of firm heterogeneity under credit constraints for economic growth. The authors focus on firm size, innovativeness and credit constraints in a semi-endogenous growth model reflecting recent empirical findings on firm heterogeneity. It allows for an explicit solution for transitional growth and balanced growth path productivity as well as the growth maximizing firm heterogeneity. This enables one to draw inference about the impact of key policy parameters of the model on these quantities and to draw conclusions about firm and capital market related policies.

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