GTAP Resources: Resource Display
| GTAP Resource #4603 |
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"Private Enterprise Productivity and Credit Market Financial Frictions in LDCs: Policy Relevance from a DSGE Model of Nigeria" by Kame Babilla, Thierry and Philip Alege Abstract The study examines the effect of credit market imperfections on economic activity in Nigeria.Theoretical evidences suggest that, stimulating private sector productivity is seen as the key way of promoting macroeconomic performances and economic development. In addition, one of the important determinants of private enterprises development is the existence of an effective financial system. However, despite the fact that stock markets are getting larger in Nigeria, they are still not large enough to be a significant source of funds to finance private enterprises activities. Consequently, private enterprises still face financial frictions in accessing to credit in Nigeria. To address this important issue, we develop a Dynamic Stochastic General Equilibrium model with financial friction of Nigeria. The model feature two type of debt in the financial contract. A debt denominated in domestic currency and a debt denominated in foreign currency. Financial friction appears because private enterprises face an External Finance Premium in the credit market. Results reveal that alleviating financial frictions is key to fostering producers’ productivity and ensuring broad-based growth. Furthermore, monetary policy performs better than fiscal policy in reducing credit market imperfections with expansionary effect on macroeconomic outcomes. As for policy implications, it comes out that, National authority should promote financial inclusion for producers to adopt the productivity and income enhancing technologies that drive investment development in Nigeria. |
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- Calibration and parameter estimation - Dynamic modeling - Economic development - Economic growth - Domestic policy analysis - Africa (West) |
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Public Access  GTAP Resource 4603 (2.1 MB) Replicated: 0 time(s)Restricted Access No documents have been attached. Special Instructions No instructions have been specified. |
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Last Modified: 9/15/2023 2:05:45 PM
