Working Paper: NBER ID: w19618
Authors: Benjamin Moll; Robert M. Townsend; Victor Zhorin
Abstract: We use a variety of different data sets from Thailand to study not only the extremes of micro and macro variables but also within-country flow of funds and labor migration. We develop a general equilibrium model that encompasses regional variation in the type of financial friction and calibrate it to measured variation in regional aggregates. The model predicts substantial capital and labor flows from rural to urban areas even though these differ only in the underlying financial regime. Predictions for micro variables not used directly provide a model validation. Finally we estimate the impact of a policy counterfactual, regional isolationism.
Keywords: Economic Development; Financial Frictions; Labor Migration; Flow of Funds
JEL Codes: D82; E21; O11
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| financial regime (F33) | capital flows (F32) |
| financial regime (F33) | labor flows (J69) |
| financial conditions (E66) | savings behavior (D14) |
| financial frictions (G19) | capital accumulation (E22) |
| financial frictions (G19) | consumption (E21) |
| financial frictions (G19) | income (E25) |
| financial frictions (G19) | inequality (D63) |