Show/Hide Menu
Hide/Show Apps
Logout
Türkçe
Türkçe
Search
Search
Login
Login
OpenMETU
OpenMETU
About
About
Open Science Policy
Open Science Policy
Open Access Guideline
Open Access Guideline
Postgraduate Thesis Guideline
Postgraduate Thesis Guideline
Communities & Collections
Communities & Collections
Help
Help
Frequently Asked Questions
Frequently Asked Questions
Guides
Guides
Thesis submission
Thesis submission
MS without thesis term project submission
MS without thesis term project submission
Publication submission with DOI
Publication submission with DOI
Publication submission
Publication submission
Supporting Information
Supporting Information
General Information
General Information
Copyright, Embargo and License
Copyright, Embargo and License
Contact us
Contact us
The effects of volatility on growth and financial development through capital market imperfections
Download
1.pdf
Date
2007-6-1
Author
Aysan , Ahmet Faruk
Metadata
Show full item record
This work is licensed under a
Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License
.
Item Usage Stats
207
views
73
downloads
Cite This
This paper provides a model to account for the empirical evidence that volatility reduces growth. In the model, greater volatility increases the cost associated with capital market imperfections and induces the financial intermediaries to charge higher interest rates. The model is based on one of overlapping generations with two types of technologies. The more productive technology requires fixed investment in the first period. Individual with income less than the amount of fixed investment may borrow in financial markets to obtain more productive technology. Increase in volatility raises the cost of borrowing and makes it less attractive to invest in more productive technology for individuals whose first period income is below certain income. Hence, volatility reduces growth by deterring people from taking advantage of more productive technology. This model also explains the empirical findings of Ramey and Ramey (1995) that investment is not the channel between volatility and growth by suggesting that total factor productivity rather than total factor accumulation is the key for growth.
Subject Keywords
Volatility
,
Growth
,
Financial development
,
Capital market imperfections
,
Costly state verification
,
Limited enforceability of contracts
URI
http://www2.feas.metu.edu.tr/metusd/ojs/index.php/metusd/article/view/149
https://hdl.handle.net/11511/58497
Journal
ODTÜ Gelişme Dergisi
Collections
Department of Economics, Article
Suggestions
OpenMETU
Core
The Assessment of macroeconomic variability and monetary transmission mechanisms in Turkey with VAR esrimates
Baştan, Emine Meltem; Gaygısız Lajunen, Esma; Department of Economics (2012)
This thesis investigates the nature of macroeconomic changes by focussing on the monetary policy changes in Turkey between 1990Q1-2011Q4 and assesses the variability of the economy via impulse response functions obtained from VAR analyses. The period of the analyses is characterized with changes of the definitions of monetary aggregates in 2002 and 2007. In order to have consistent monetary series, the new and old series are constructed according to new and old definitions and then analyses are carried out ...
Financial development and economic fluctuations
Tiryaki, Gisele Ferreira (Orta Doğu Teknik Üniversitesi (Ankara, Turkey), 2003-6-1)
This paper provides empirical evidence on the link between financial system development and business cycles volatility. Previous studies have shown that economic fluctuations become less pronounced as the financial system of a country develops. This paper reveals that this result is not apparent when dealing with shorter horizons and when considering the behavior of other components of output, such as private investment and consumption. Using a dynamic Generalized Method of Moments technique on a cros...
The Impact of Macro-Economic Drivers in Housing Markets: The US Cas
Yılmaz, Bilgi; Yerlikaya Özkurt, Fatma; Kestel, Sevtap Ayşe (2021-08-01)
This paper analyzes the effect of macro-economic, financial and commodity market indicators on housing markets. We compare the efficiency of the models generated by Generalized Linear Models (GLM) and Multivariate Adaptive Regression Splines (MARS) according to method free measures for estimating the housing market trend. These models are used for the first time to identify the influence of macro-economic indicators on housing markets and the estimation of the trend in housing markets to our best knowledge....
The Impact of Modeling on Robust Inventory Management Under Demand Uncertainty
Solyali, Oguz; Cordeau, Jean-Francois; Laporte, Gilbert (2016-04-01)
This study considers a basic inventory management problem with nonzero fixed order costs under interval demand uncertainty. The existing robust formulations obtained by applying well-known robust optimization methodologies become computationally intractable for large problem instances due to the presence of binary variables. This study resolves this intractability issue by proposing a new robust formulation that is shown to be solvable in polynomial time when the initial inventory is zero or negative. Becau...
Modelling nonlinearities in European money demand : an application of threshold cointegration model
Korucu Gümüşoğlu, Nebile; Öcal, Nadir; Department of Economics (2013)
The money demand function has been regarded as a fundamental building block in macroeconomic modelling, as it represents the link between the monetary policy and rest of the economy. The extensive literature on money demand function is concerned with the existence of a stable money demand function, which ensures adequate prediction of impact of a given change in money supply on other economic variables such as, inflation, interest rates, national income, private investment and other policy variables. This t...
Citation Formats
IEEE
ACM
APA
CHICAGO
MLA
BibTeX
A. F. Aysan, “The effects of volatility on growth and financial development through capital market imperfections,”
ODTÜ Gelişme Dergisi
, vol. 34, no. 1, pp. 1–18, 2007, Accessed: 00, 2020. [Online]. Available: http://www2.feas.metu.edu.tr/metusd/ojs/index.php/metusd/article/view/149.