BORROWING CONSTRAINTS, HUMAN-CAPITAL ACCUMULATION, AND GROWTH

Borrowing constraints increase aggregate savings, and therefore may in crease growth. This paper argues, however, that by reducing human capi tal accumulation, borrowing constraints also have negative effects on growth. These effects are discussed in an overlapping-generations mode l with endogenous growth. Empirical evidence for OECD and developing c ountries lend support to the main predictions of the model.