Financial Fragility, Business Creation and Job Destruction
AbstractWe build a model of endogenous destruction with credit and labor market imperfections, represented by a matching process between financiers and entrepreneurs on one hand, and entrepreneurs and workers on the other hand. Business creation, credit opening and job destruction represent three active margins of the model. Financial imperfections lead to financial fragility. This implies the existence of a forth latent margin which may be activated in the case of repudiation of financial contracts. This paradigm is applied to the recent development of the U.S. economy. An empirical test in panel of OECD countries further suggests the importance of venture capital for macroeconomic variables.
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Bibliographic InfoArticle provided by De Boeck Université in its journal Recherches économiques de Louvain.
Volume (Year): 68 (2002)
Issue (Month): 1 ()
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Web page: http://www.cairn.info/revue-recherches-economiques-de-louvain.htm
Other versions of this item:
- Etienne WASMER & Philippe WEIL, 2002. "Financial Fragility, Business Creation and Job Destruction," Discussion Papers (REL - Recherches Economiques de Louvain) 2002026, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
- J64 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Unemployment: Models, Duration, Incidence, and Job Search
- G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
- E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers
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