@article{59e9ad3346a24d1d84ecc0d611a14e5e,
title = "Minimum investment requirement, financial market imperfection and self-fulfilling belief",
abstract = "We develop a model in which a strategic complementarity in saving decisions arises due to a minimum investment requirement and financial market imperfection. We explore the role of self-fulling beliefs in determining the long run dynamics. The model exhibits a wide range of dynamic phenomena such as a poverty trap, a big push and a sunspot equilibrium, depending on the level of financial market imperfection. They account for excessive volatility and a sudden change in the saving rate and its macroeconomic consequences without any shocks to fundamentals.",
keywords = "Financial market imperfection, Saving rate, Self-fulfilling belief, Strategic complementarity, Sunspot, multiple equilibria",
author = "Tomoo Kikuchi and George Vachadze",
note = "Funding Information: We thank Costas Azariadis, Yannis Ioannides, Tatsushi Oka, Kwanho Shin, Enrico Spolaore, Yong Wang for their helpful suggestions and comments as well as Wang Zi for excellent research assistance. The financial support of Singapore Ministry of Education, Academic Research Fund Tier 1 R-122-000-112-112, City University of New York, PSC-CUNY Research Award 60030-40 41, and College of Staten Island Provost{\textquoteright}s Research Scholarship Award is gratefully acknowledged. Funding Information: Acknowledgments We thank Costas Azariadis, Yannis Ioannides, Tatsushi Oka, Kwanho Shin, Enrico Spolaore, Yong Wang for their helpful suggestions and comments as well as Wang Zi for excellent research assistance. The financial support of Singapore Ministry of Education, Academic Research Fund Tier 1 R-122-000-112-112, City University of New York, PSC-CUNY Research Award 60030-40 41, and College of Staten Island Provost{\textquoteright}s Research Scholarship Award is gratefully acknowledged. Publisher Copyright: {\textcopyright} 2017, Springer-Verlag Berlin Heidelberg.",
year = "2018",
month = apr,
day = "1",
doi = "10.1007/s00191-017-0510-z",
language = "English",
volume = "28",
pages = "305--332",
journal = "Journal of Evolutionary Economics",
issn = "0936-9937",
publisher = "Springer New York",
number = "2",
}