Finance and Economic Growth in a Dynamic Game

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Abstract

We investigate how the relaxation of financial constraints affects economic growth in a dynamic game of the tragedy of the commons by introducing an imperfect financial market into Tornell and Velasco’s (J Polit Econ 100(6):1208–1231, 1992) model. It is shown that whereas the relaxation of financial constraints enhances economic growth if agents have access only to a common asset whose property rights are not secure, the relaxation of financial constraints reduces economic growth if agents can have access not only to a common asset but also to a private asset whose property rights are secure.

Keywords

Dynamic game Interest groups Property rights Financial market imperfections Economic growth 

JEL Classification

C73 D92 O43 

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Copyright information

© Springer Science+Business Media, LLC, part of Springer Nature 2018

Authors and Affiliations

  1. 1.School of EconomicsKwansei Gakuin UniversityNishinomiyaJapan
  2. 2.Research Institute for Economics and Business AdministrationKobe UniversityNadaku, KobeJapan
  3. 3.Research Institute of EconomyTrade and Industry (RIETI)TokyoJapan

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