Sunspots And Credit Frictions
AbstractWe examine a general equilibrium model with collateral constraints and increasing returns to scale in production. The utility function is nonseparable, with no income effect on the consumerÃÂ¡ÃÂ¯s choice of leisure. Unlike this model without a collateral constraint, we find that indeterminacy of equilibria is possible. Hence, business cycles can be driven by self-fulfilling expectations. This is the case for more realistic parametrizations than in previous, similar models without these features.
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Bibliographic InfoArticle provided by Cambridge University Press in its journal Macroeconomic Dynamics.
Volume (Year): 17 (2013)
Issue (Month): 05 (July)
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Other versions of this item:
- Sharon Harrison & Mark Weder, 2010. "Sunspots and Credit Frictions," CDMA Working Paper Series 201001, Centre for Dynamic Macroeconomic Analysis.
- Sharon G. Harrison & Mark Weder, 2010. "Sunspots and Credit Frictions," School of Economics Working Papers 2010-02, University of Adelaide, School of Economics.
- E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
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Blog mentionsAs found by EconAcademics.org, the blog aggregator for Economics research:CitEc Project, subscribe to its RSS feed for this item.
- NUTAHARA Kengo, 2010.
"Asset Prices and Monetary Policy in a Sticky-Price Economy with Financial Frictions,"
10060, Research Institute of Economy, Trade and Industry (RIETI).
- Nutahara, Kengo, 2010. "Asset prices and monetary policy in a sticky-price economy with financial frictions," MPRA Paper 24113, University Library of Munich, Germany.
- Costas Azariadis & Leo Kaas, 2012.
"Self-fulfilling credit cycles,"
2012-047, Federal Reserve Bank of St. Louis.
- Costas Azariadis & Leo Kaas, 2012. "Self-Fulfilling Credit Cycles," Working Paper Series of the Department of Economics, University of Konstanz 2012-16, Department of Economics, University of Konstanz.
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