01722cas a2200241 a 4500 AALejournalIMF006290 230101c9999 xx r poo 0 0eng d 5.00 USD 9781451962802 1018-5941 BD-DhAAL BD-DhAAL Sandri, Damiano. Growth and Capital Flows with Risky Entrepreneurship / Damiano Sandri. Washington, D.C. : International Monetary Fund, 2010. 1 online resource (27 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students This paper shows that the behavior of entrepreneurs facing incomplete financial markets and risky investment can explain why growth accelerations in developing countries tend to be associated with current account improvements. The uninsurable risk of losing invested capital forces entrepreneurs to rely on self-financing, so that when business opportunities open up entrepreneurs increase saving to finance the investment that produces growth. The key insight is that saving has to rise more than investment to allow also for the accumulation of precautionary assets. Plausibly calibrated simulations show that this net saving increase can sustain large and persistent net capital outflows. Mode of access: Internet IMF Working Papers; Working Paper ; No. 2010/037 Full text available on IMF http://elibrary.imf.org/view/journals/001/2010/037/001.2010.issue-037-en.xml IMF e-Library