A study on the impact of credit market imperfections on technology diffusion and monetary policy

My thesis studies the impact of credit market imperfections on economic growth/technology diffusion and currency crises.; In chapter one, I present how economic historians have debated whether imperfections in British capital markets caused a delay in adoption of the second industrial revolution technologies in Britain after 1870. Despite numerous studies, the literature has not found a conclusive answer.; In chapter two, using a unique data set of over 600 companies quoted on the London stock exchange between 1895 and 1904, this first part of the thesis tests whether firms operating with second industrial revolution technologies were more financially constrained than other firms. Economic performances of credit market constrained firms should heavily depend on the access to informal sources of capital, and on tight and close relationships with the bank. Close relationships with the bank are proxied by geographical distance between the company and the bank. Access to informal sources of capital is measured by the number of titled people on the administration board of the company, and by the number of directorships held by the directors of the companies in the sample. My findings show that economic performances of new technologies firms were positively affected by shorter distance to a bank, by the number of directorships, and by the number of titled directors serving in their administration board.; Chapter three studies the importance of financial frictions in explaining the developments of the 1997-1998 financial crises in East Asia. We develop a model based on traded and non-traded sectors where foreign loans to local producers are collateralized. The financial crisis is described as a sudden stop in the inflow of financial capital: foreign investors raise their collateral requirements on domestic producers.; Similarly to the experience of the 1997-98 crises, in the model the tightening of the collateral constraint generates a depreciation of the nominal and the real exchange rate, a fall in output and employment. In this environment we look for the optimal monetary policy. We find that the optimal monetary policy consists of increasing the interest rate immediately after the crisis and decreasing it during the following periods.