Evaluation of Financial Liberalization : A General Equilibrium Model with Constrained Occupation Choice
The objective of this paper is to assess both the aggregate growth effects and the distributional consequences of financial liberalization as observed in Thailand from 1976 to 1996. A general equilibrium occupational choice model with two sectors, one without intermediation, and the other with borrowing and lending, is taken to Thai data. Key parameters of the production technology and the distribution of entrepreneurial talent are estimated by maximizing the likelihood of transition into business given initial wealth as observed in two distinct datasets. Other parameters of the model are calibrated to try to match the two decades of growth as well as observed changes in inequality, labor share, savings, and the number of entrepreneurs. Without an expansion in the size of the intermediated sector, Thailand would have evolved very differently, namely, with a drastically lower growth rate, high residual subsistence sector, non-increasing wages, but lower inequality. The financial liberalization brings welfare gains and losses to different subsets of the population. Primary winners are talented would-be entrepreneurs who lack credit and cannot otherwise go into business (or invest little capital). Mean gains for these winners range from 17 to 34 percent of observed overall average household income. But liberalization also induces greater demand by entrepreneurs for workers resulting in increases in the wage and lower profits of relatively rich entrepreneurs of the same order of magnitude as the observed overall average income of firm owners. Foreign capital has no significant impact on growth or the distribution of observed income.
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dig-okr-10986182632024-08-08T17:47:16Z Evaluation of Financial Liberalization : A General Equilibrium Model with Constrained Occupation Choice Townsend, Robert M. Gine, Xavier FINANCIAL LIBERALIZATION AGGREGATE VARIABILITY GROWTH PATTERNS OCCUPATIONAL CHOICE INTERMEDIATION BORROWING OPERATIONS PRODUCTION CAPACITY TECHNOLOGY APPRAISAL ENTREPRENEURSHIP BUSINESS ENVIRONMENT INEQUITY LABOR STATISTICS SAVINGS BEHAVIOR WELFARE ECONOMICS FOREIGN CAPITAL INCOME DISTRIBUTION AGRICULTURE BANK OF SPAIN CAPITAL EMPLOYED CAPITALIZATION CLOSED ECONOMY COMMERCIAL BANKS COST OF CAPITAL COST OF LIVING CREDIT MARKETS CURRENT ASSETS DEPOSITS DEREGULATION DISTRIBUTION OF WEALTH DUAL ECONOMY ECONOMIC DEVELOPMENT ENTREPRENEURSHIP EQUILIBRIUM FINANCIAL CRISIS FINANCIAL DEEPENING FINANCIAL INSTITUTIONS FINANCIAL SECTOR FIXED COSTS FOREIGN CAPITAL FOREIGN EXCHANGE FUNCTIONAL FORMS GDP GENERAL EQUILIBRIUM MODEL GROSS PROFIT GROWTH RATE HIGH INCOME HOUSEHOLD INCOME HUMAN CAPITAL INCOME INCOME DISTRIBUTION INDUSTRIALIZATION INHERITANCE INPUT USE INTEREST RATE INTEREST RATES LENDING RATES LIBERALIZATION MAXIMUM LIKELIHOOD ESTIMATION MIGRATION MONEYLENDERS PER CAPITA INCOME POLITICAL ECONOMY PRODUCTION FUNCTION PRODUCTION TECHNOLOGY PROFITABILITY SAVINGS UTILITY FUNCTION UTILITY MAXIMIZATION WAGES WEALTH WEALTH DISTRIBUTION WELFARE GAINS INCOME DISTRIBUTION AGRICULTURE The objective of this paper is to assess both the aggregate growth effects and the distributional consequences of financial liberalization as observed in Thailand from 1976 to 1996. A general equilibrium occupational choice model with two sectors, one without intermediation, and the other with borrowing and lending, is taken to Thai data. Key parameters of the production technology and the distribution of entrepreneurial talent are estimated by maximizing the likelihood of transition into business given initial wealth as observed in two distinct datasets. Other parameters of the model are calibrated to try to match the two decades of growth as well as observed changes in inequality, labor share, savings, and the number of entrepreneurs. Without an expansion in the size of the intermediated sector, Thailand would have evolved very differently, namely, with a drastically lower growth rate, high residual subsistence sector, non-increasing wages, but lower inequality. The financial liberalization brings welfare gains and losses to different subsets of the population. Primary winners are talented would-be entrepreneurs who lack credit and cannot otherwise go into business (or invest little capital). Mean gains for these winners range from 17 to 34 percent of observed overall average household income. But liberalization also induces greater demand by entrepreneurs for workers resulting in increases in the wage and lower profits of relatively rich entrepreneurs of the same order of magnitude as the observed overall average income of firm owners. Foreign capital has no significant impact on growth or the distribution of observed income. 2014-05-12T18:48:52Z 2014-05-12T18:48:52Z 2003-04 http://documents.worldbank.org/curated/en/2003/04/2243833/evaluation-financial-liberalization-general-equilibrium-model-constrained-occupation-choice https://hdl.handle.net/10986/18263 English en_US Policy Research Working Paper;No. 3014 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ application/pdf text/plain World Bank, Washington, DC |
institution |
Banco Mundial |
collection |
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country |
Estados Unidos |
countrycode |
US |
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Bibliográfico |
access |
En linea |
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dig-okr |
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biblioteca |
region |
America del Norte |
libraryname |
Biblioteca del Banco Mundial |
language |
English en_US |
topic |
FINANCIAL LIBERALIZATION AGGREGATE VARIABILITY GROWTH PATTERNS OCCUPATIONAL CHOICE INTERMEDIATION BORROWING OPERATIONS PRODUCTION CAPACITY TECHNOLOGY APPRAISAL ENTREPRENEURSHIP BUSINESS ENVIRONMENT INEQUITY LABOR STATISTICS SAVINGS BEHAVIOR WELFARE ECONOMICS FOREIGN CAPITAL INCOME DISTRIBUTION AGRICULTURE BANK OF SPAIN CAPITAL EMPLOYED CAPITALIZATION CLOSED ECONOMY COMMERCIAL BANKS COST OF CAPITAL COST OF LIVING CREDIT MARKETS CURRENT ASSETS DEPOSITS DEREGULATION DISTRIBUTION OF WEALTH DUAL ECONOMY ECONOMIC DEVELOPMENT ENTREPRENEURSHIP EQUILIBRIUM FINANCIAL CRISIS FINANCIAL DEEPENING FINANCIAL INSTITUTIONS FINANCIAL SECTOR FIXED COSTS FOREIGN CAPITAL FOREIGN EXCHANGE FUNCTIONAL FORMS GDP GENERAL EQUILIBRIUM MODEL GROSS PROFIT GROWTH RATE HIGH INCOME HOUSEHOLD INCOME HUMAN CAPITAL INCOME INCOME DISTRIBUTION INDUSTRIALIZATION INHERITANCE INPUT USE INTEREST RATE INTEREST RATES LENDING RATES LIBERALIZATION MAXIMUM LIKELIHOOD ESTIMATION MIGRATION MONEYLENDERS PER CAPITA INCOME POLITICAL ECONOMY PRODUCTION FUNCTION PRODUCTION TECHNOLOGY PROFITABILITY SAVINGS UTILITY FUNCTION UTILITY MAXIMIZATION WAGES WEALTH WEALTH DISTRIBUTION WELFARE GAINS INCOME DISTRIBUTION AGRICULTURE FINANCIAL LIBERALIZATION AGGREGATE VARIABILITY GROWTH PATTERNS OCCUPATIONAL CHOICE INTERMEDIATION BORROWING OPERATIONS PRODUCTION CAPACITY TECHNOLOGY APPRAISAL ENTREPRENEURSHIP BUSINESS ENVIRONMENT INEQUITY LABOR STATISTICS SAVINGS BEHAVIOR WELFARE ECONOMICS FOREIGN CAPITAL INCOME DISTRIBUTION AGRICULTURE BANK OF SPAIN CAPITAL EMPLOYED CAPITALIZATION CLOSED ECONOMY COMMERCIAL BANKS COST OF CAPITAL COST OF LIVING CREDIT MARKETS CURRENT ASSETS DEPOSITS DEREGULATION DISTRIBUTION OF WEALTH DUAL ECONOMY ECONOMIC DEVELOPMENT ENTREPRENEURSHIP EQUILIBRIUM FINANCIAL CRISIS FINANCIAL DEEPENING FINANCIAL INSTITUTIONS FINANCIAL SECTOR FIXED COSTS FOREIGN CAPITAL FOREIGN EXCHANGE FUNCTIONAL FORMS GDP GENERAL EQUILIBRIUM MODEL GROSS PROFIT GROWTH RATE HIGH INCOME HOUSEHOLD INCOME HUMAN CAPITAL INCOME INCOME DISTRIBUTION INDUSTRIALIZATION INHERITANCE INPUT USE INTEREST RATE INTEREST RATES LENDING RATES LIBERALIZATION MAXIMUM LIKELIHOOD ESTIMATION MIGRATION MONEYLENDERS PER CAPITA INCOME POLITICAL ECONOMY PRODUCTION FUNCTION PRODUCTION TECHNOLOGY PROFITABILITY SAVINGS UTILITY FUNCTION UTILITY MAXIMIZATION WAGES WEALTH WEALTH DISTRIBUTION WELFARE GAINS INCOME DISTRIBUTION AGRICULTURE |
spellingShingle |
FINANCIAL LIBERALIZATION AGGREGATE VARIABILITY GROWTH PATTERNS OCCUPATIONAL CHOICE INTERMEDIATION BORROWING OPERATIONS PRODUCTION CAPACITY TECHNOLOGY APPRAISAL ENTREPRENEURSHIP BUSINESS ENVIRONMENT INEQUITY LABOR STATISTICS SAVINGS BEHAVIOR WELFARE ECONOMICS FOREIGN CAPITAL INCOME DISTRIBUTION AGRICULTURE BANK OF SPAIN CAPITAL EMPLOYED CAPITALIZATION CLOSED ECONOMY COMMERCIAL BANKS COST OF CAPITAL COST OF LIVING CREDIT MARKETS CURRENT ASSETS DEPOSITS DEREGULATION DISTRIBUTION OF WEALTH DUAL ECONOMY ECONOMIC DEVELOPMENT ENTREPRENEURSHIP EQUILIBRIUM FINANCIAL CRISIS FINANCIAL DEEPENING FINANCIAL INSTITUTIONS FINANCIAL SECTOR FIXED COSTS FOREIGN CAPITAL FOREIGN EXCHANGE FUNCTIONAL FORMS GDP GENERAL EQUILIBRIUM MODEL GROSS PROFIT GROWTH RATE HIGH INCOME HOUSEHOLD INCOME HUMAN CAPITAL INCOME INCOME DISTRIBUTION INDUSTRIALIZATION INHERITANCE INPUT USE INTEREST RATE INTEREST RATES LENDING RATES LIBERALIZATION MAXIMUM LIKELIHOOD ESTIMATION MIGRATION MONEYLENDERS PER CAPITA INCOME POLITICAL ECONOMY PRODUCTION FUNCTION PRODUCTION TECHNOLOGY PROFITABILITY SAVINGS UTILITY FUNCTION UTILITY MAXIMIZATION WAGES WEALTH WEALTH DISTRIBUTION WELFARE GAINS INCOME DISTRIBUTION AGRICULTURE FINANCIAL LIBERALIZATION AGGREGATE VARIABILITY GROWTH PATTERNS OCCUPATIONAL CHOICE INTERMEDIATION BORROWING OPERATIONS PRODUCTION CAPACITY TECHNOLOGY APPRAISAL ENTREPRENEURSHIP BUSINESS ENVIRONMENT INEQUITY LABOR STATISTICS SAVINGS BEHAVIOR WELFARE ECONOMICS FOREIGN CAPITAL INCOME DISTRIBUTION AGRICULTURE BANK OF SPAIN CAPITAL EMPLOYED CAPITALIZATION CLOSED ECONOMY COMMERCIAL BANKS COST OF CAPITAL COST OF LIVING CREDIT MARKETS CURRENT ASSETS DEPOSITS DEREGULATION DISTRIBUTION OF WEALTH DUAL ECONOMY ECONOMIC DEVELOPMENT ENTREPRENEURSHIP EQUILIBRIUM FINANCIAL CRISIS FINANCIAL DEEPENING FINANCIAL INSTITUTIONS FINANCIAL SECTOR FIXED COSTS FOREIGN CAPITAL FOREIGN EXCHANGE FUNCTIONAL FORMS GDP GENERAL EQUILIBRIUM MODEL GROSS PROFIT GROWTH RATE HIGH INCOME HOUSEHOLD INCOME HUMAN CAPITAL INCOME INCOME DISTRIBUTION INDUSTRIALIZATION INHERITANCE INPUT USE INTEREST RATE INTEREST RATES LENDING RATES LIBERALIZATION MAXIMUM LIKELIHOOD ESTIMATION MIGRATION MONEYLENDERS PER CAPITA INCOME POLITICAL ECONOMY PRODUCTION FUNCTION PRODUCTION TECHNOLOGY PROFITABILITY SAVINGS UTILITY FUNCTION UTILITY MAXIMIZATION WAGES WEALTH WEALTH DISTRIBUTION WELFARE GAINS INCOME DISTRIBUTION AGRICULTURE Townsend, Robert M. Gine, Xavier Evaluation of Financial Liberalization : A General Equilibrium Model with Constrained Occupation Choice |
description |
The objective of this paper is to assess
both the aggregate growth effects and the distributional
consequences of financial liberalization as observed in
Thailand from 1976 to 1996. A general equilibrium
occupational choice model with two sectors, one without
intermediation, and the other with borrowing and lending, is
taken to Thai data. Key parameters of the production
technology and the distribution of entrepreneurial talent
are estimated by maximizing the likelihood of transition
into business given initial wealth as observed in two
distinct datasets. Other parameters of the model are
calibrated to try to match the two decades of growth as well
as observed changes in inequality, labor share, savings, and
the number of entrepreneurs. Without an expansion in the
size of the intermediated sector, Thailand would have
evolved very differently, namely, with a drastically lower
growth rate, high residual subsistence sector,
non-increasing wages, but lower inequality. The financial
liberalization brings welfare gains and losses to different
subsets of the population. Primary winners are talented
would-be entrepreneurs who lack credit and cannot otherwise
go into business (or invest little capital). Mean gains for
these winners range from 17 to 34 percent of observed
overall average household income. But liberalization also
induces greater demand by entrepreneurs for workers
resulting in increases in the wage and lower profits of
relatively rich entrepreneurs of the same order of magnitude
as the observed overall average income of firm owners.
Foreign capital has no significant impact on growth or the
distribution of observed income. |
topic_facet |
FINANCIAL LIBERALIZATION AGGREGATE VARIABILITY GROWTH PATTERNS OCCUPATIONAL CHOICE INTERMEDIATION BORROWING OPERATIONS PRODUCTION CAPACITY TECHNOLOGY APPRAISAL ENTREPRENEURSHIP BUSINESS ENVIRONMENT INEQUITY LABOR STATISTICS SAVINGS BEHAVIOR WELFARE ECONOMICS FOREIGN CAPITAL INCOME DISTRIBUTION AGRICULTURE BANK OF SPAIN CAPITAL EMPLOYED CAPITALIZATION CLOSED ECONOMY COMMERCIAL BANKS COST OF CAPITAL COST OF LIVING CREDIT MARKETS CURRENT ASSETS DEPOSITS DEREGULATION DISTRIBUTION OF WEALTH DUAL ECONOMY ECONOMIC DEVELOPMENT ENTREPRENEURSHIP EQUILIBRIUM FINANCIAL CRISIS FINANCIAL DEEPENING FINANCIAL INSTITUTIONS FINANCIAL SECTOR FIXED COSTS FOREIGN CAPITAL FOREIGN EXCHANGE FUNCTIONAL FORMS GDP GENERAL EQUILIBRIUM MODEL GROSS PROFIT GROWTH RATE HIGH INCOME HOUSEHOLD INCOME HUMAN CAPITAL INCOME INCOME DISTRIBUTION INDUSTRIALIZATION INHERITANCE INPUT USE INTEREST RATE INTEREST RATES LENDING RATES LIBERALIZATION MAXIMUM LIKELIHOOD ESTIMATION MIGRATION MONEYLENDERS PER CAPITA INCOME POLITICAL ECONOMY PRODUCTION FUNCTION PRODUCTION TECHNOLOGY PROFITABILITY SAVINGS UTILITY FUNCTION UTILITY MAXIMIZATION WAGES WEALTH WEALTH DISTRIBUTION WELFARE GAINS INCOME DISTRIBUTION AGRICULTURE |
author |
Townsend, Robert M. Gine, Xavier |
author_facet |
Townsend, Robert M. Gine, Xavier |
author_sort |
Townsend, Robert M. |
title |
Evaluation of Financial Liberalization : A General Equilibrium Model with Constrained Occupation Choice |
title_short |
Evaluation of Financial Liberalization : A General Equilibrium Model with Constrained Occupation Choice |
title_full |
Evaluation of Financial Liberalization : A General Equilibrium Model with Constrained Occupation Choice |
title_fullStr |
Evaluation of Financial Liberalization : A General Equilibrium Model with Constrained Occupation Choice |
title_full_unstemmed |
Evaluation of Financial Liberalization : A General Equilibrium Model with Constrained Occupation Choice |
title_sort |
evaluation of financial liberalization : a general equilibrium model with constrained occupation choice |
publisher |
World Bank, Washington, DC |
publishDate |
2003-04 |
url |
http://documents.worldbank.org/curated/en/2003/04/2243833/evaluation-financial-liberalization-general-equilibrium-model-constrained-occupation-choice https://hdl.handle.net/10986/18263 |
work_keys_str_mv |
AT townsendrobertm evaluationoffinancialliberalizationageneralequilibriummodelwithconstrainedoccupationchoice AT ginexavier evaluationoffinancialliberalizationageneralequilibriummodelwithconstrainedoccupationchoice |
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1807154825583919104 |