Jump to ContentJump to Main Navigation
Volatility and Growth$
Users without a subscription are not able to see the full content.

Philippe Aghion and Abhijit Banerjee

Print publication date: 2005

Print ISBN-13: 9780199248612

Published to Oxford Scholarship Online: January 2007

DOI: 10.1093/acprof:oso/9780199248612.001.0001

Show Summary Details
Page of

PRINTED FROM OXFORD SCHOLARSHIP ONLINE (oxford.universitypressscholarship.com). (c) Copyright Oxford University Press, 2021. All Rights Reserved. An individual user may print out a PDF of a single chapter of a monograph in OSO for personal use. date: 05 August 2021

Endogeneizing Volatility: Pecuniary Externalities and the Credit Channel

Endogeneizing Volatility: Pecuniary Externalities and the Credit Channel

(p.49) 3 Endogeneizing Volatility: Pecuniary Externalities and the Credit Channel
Volatility and Growth

Phillippe Aghion (Contributor Webpage)

Abhijit Banerjee (Contributor Webpage)

Oxford University Press

This chapter shows how volatility can emerge endogenously, in a world where credit constraints sometimes bind. An elementary theoretical framework is developed, which generates endogenous and persistent volatility in a growing economy with credit constraints. The basic mechanisms are the interaction of credit constraints and endogenous changes in market prices. It is argued that the model can account for a number of observed facts about lending booms and crises in emerging market economies. It also provides additional arguments in favour of countercyclical budgetary policies in less financially developed economies.

Keywords:   credit constraints, endogenous volatility, persistent volatility, emerging market economies, AK growth model, booms, slumps

Oxford Scholarship Online requires a subscription or purchase to access the full text of books within the service. Public users can however freely search the site and view the abstracts and keywords for each book and chapter.

Please, subscribe or login to access full text content.

If you think you should have access to this title, please contact your librarian.

To troubleshoot, please check our FAQs , and if you can't find the answer there, please contact us .