Education, borrowing constraints and growth: A note

The choice between private and government provision of a productive public good like infrastructure (public capital) is examined in the context of an endogenously growing open economy. The accumulation of public capital need not require government provision, in contrast to the standard assumption in the literature. Even with an efficient government, the relative costs and benefits of government and private provision depend crucially on the economy's underlying structural conditions and borrowing constraints in international capital markets. Countries with limited substitution possibilities and large production externalities may benefit from governments encouraging private provision of public capital through targeted investment subsidies. By contrast, countries with flexible substitution possibilities and relatively smaller externalities may benefit either from governments directly providing public capital or from regulation of private providers. The transitional dynamics also are shown to depend on the underlying elasticity of substitution and the size of the production externality.

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Borrowing Constraints and its Impact on The First-Time Buyer Market in Britain

10.15396/eres2003_103 ◽

2003 ◽

Keyword(s):

Borrowing Constraints ◽

First Time

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Borrowing Constraints and Homeownership Over the Recent Cycle

SSRN Electronic Journal ◽

10.2139/ssrn.2746703 ◽

2016 ◽

Cited By ~ 4

Author(s):

Arthur Acolin ◽

Jesse Bricker ◽

Paul S. Calem ◽

Susan M. Wachter

Keyword(s):

Borrowing Constraints

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Housing Choice Under Borrowing Constraints

SSRN Electronic Journal ◽

10.2139/ssrn.3175505 ◽

2018 ◽

Cited By ~ 1

Author(s):

Kevin Alan Park

Keyword(s):

Borrowing Constraints ◽

Housing Choice

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Real Estate

10.1093/oso/9780198807537.003.0006 ◽

2017 ◽

Author(s):

Stefan Homburg

Keyword(s):

Real Estate ◽

Great Recession ◽

House Prices ◽

Borrowing Constraints ◽

Macroeconomic Models ◽

Land Prices ◽

The Great Recession ◽

Quantitative Importance

Chapter 6 examines real estate as a neglected feature of actual economies. It begins with an empirical overview demonstrating the preeminent role of land as a part of nonfinancial wealth. Whereas many macroeconomic models represent nonfinancial wealth by a symbol K that is interpreted as machines and equipment (if not robots), the text makes clear that such items are of minor quantitative importance. In contemporary economies, nonfinancial wealth consists chiefly of real estate. This is the proper reason so many analysts conjecture a link between house prices and the Great Recession. Changes in house prices (primarily changes in land prices) operate on the economy through their influence on nonfinancial wealth. Nonfinancial wealth affects consumption directly and investment indirectly since it relaxes or tightens borrowing constraints. Building on the results obtained in previous chapters, the text studies housing manias and leverage cycles and relates its main findings to US data.

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Introduction

10.1093/oso/9780198807537.003.0001 ◽

2017 ◽

Author(s):

Stefan Homburg

Keyword(s):

Great Recession ◽

Rational Expectations ◽

Borrowing Constraints ◽

Distinctive Features ◽

Net Worth ◽

The Great Recession ◽

External Finance ◽

International Audience ◽

Aims And Scope

Chapter 1 describes the book’s aims and scope. The main objective is to improve understanding of the Great Recession and its aftermath. The book provides a unified theoretical framework that uses dynamic general equilibrium models, or DGE, but dispenses with the rational expectations assumption. Its distinctive features are clean models with a rich institutional structure encompassing credit money, external finance, borrowing constraints, net worth, real estate, and commercial banks. Written for economists in universities, governments, and financial institutions, the book addresses an international audience.

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