Dualism and Macroeconomic Volatility
| Title: | Dualism and Macroeconomic Volatility |
| Author: |
Piketty, Thomas; Banerjee, Abhijit; Aghion, Philippe
Note: Order does not necessarily reflect citation order of authors. |
| Citation: | Aghion, Philippe, Abhijit Banerjee, and Thomas Piketty. 1999. Dualism and macroeconomic volatility. Quarterly Journal of Economics 114(4): 1359-1397. |
| Full Text & Related Files: |
aghion_dualism.pdf (236.0Kb; PDF) 
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| Abstract: | This paper develops a simple macroeconomic model that shows that combining capital market imperfections together with unequal access to investment opportunities across individuals can generate endogenous and permanent fluctuations in aggregate GDP, investment, and interest rates. Reducing inequality of access may be a necessary condition for macroeconomic stabilization. Moreover, countercyclical fiscal policies have a role to play: in our model savings are underutilized in slumps because of the limited debt capacity of potential investors. Therefore, the government should issue public debt during recessions in order to absorb those idle savings and finance investment subsidies or tax cuts for investors. |
| Published Version: | doi:10.1162/003355399556296 |
| Terms of Use: | This article is made available under the terms and conditions applicable to Other Posted Material, as set forth at http://nrs.harvard.edu/urn-3:HUL.InstRepos:dash.current.terms-of-use#LAA |
| Citable link to this page: | http://nrs.harvard.edu/urn-3:HUL.InstRepos:4554124 |
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Peer reviewed scholarly articles from the Faculty of Arts and Sciences of Harvard University
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