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 consumer'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 G. Harrison & Mark Weder, 2010. "Sunspots and Credit Frictions," School of Economics Working Papers 2010-02, University of Adelaide, School of Economics.
- Sharon Harrison & Mark Weder, 2010. "Sunspots and Credit Frictions," CDMA Working Paper Series 201001, Centre for Dynamic Macroeconomic Analysis.
- 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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