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Collateralized capital and news-driven cycles

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  • Keiichiro Kobayashi

    ()
    (Research Institute of Economy, Trade, and Industry)

  • Kengo Nutahara

    ()
    (Graduate School of Economics, University of Tokyo, and the JSPS Research Fellow)

Abstract

Kobayashi, Nakajima, and Inaba (2007) show that in the neoclassical business cycle models with collateral constraints, a boom can be generated in response to an optimistic change in expectations on the future state of the economy. They call this business cycle a news-driven cycle. In their models, land is used as collateral, and borrowing for working capital is limited by the value of collateralized land. We simplify their model to the one without land. We show that in the economy where capital goods are used as collateral, the news-driven cycles can be generated.

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Bibliographic Info

Article provided by AccessEcon in its journal Economics Bulletin.

Volume (Year): 5 (2007)
Issue (Month): 18 ()
Pages: 1-9

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Handle: RePEc:ebl:ecbull:eb-07e30005

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  1. Jaimovich, Nir & Rebelo, Sérgio, 2006. "Can News About the Future Drive the Business Cycle?," CEPR Discussion Papers, C.E.P.R. Discussion Papers 5877, C.E.P.R. Discussion Papers.
  2. Keiichiro Kobayashi & Kengo Nutahara, 2007. "Collateralized capital and news-driven cycles," Economics Bulletin, AccessEcon, vol. 5(18), pages 1-9.
  3. Hayashi, Fumio, 1982. "Tobin's Marginal q and Average q: A Neoclassical Interpretation," Econometrica, Econometric Society, Econometric Society, vol. 50(1), pages 213-24, January.
  4. Kobayashi, Keiichiro & Nakajima, Tomoyuki & Inaba, Masaru, 2012. "Collateral Constraint And News-Driven Cycles," Macroeconomic Dynamics, Cambridge University Press, Cambridge University Press, vol. 16(05), pages 752-776, November.
  5. Kiyotaki, Nobuhiro & Moore, John, 1997. "Credit Cycles," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 105(2), pages 211-48, April.
  6. Beaudry, Paul & Portier, Franck, 2004. "An exploration into Pigou's theory of cycles," Journal of Monetary Economics, Elsevier, Elsevier, vol. 51(6), pages 1183-1216, September.
  7. Uhlig, H., 1995. "A toolkit for analyzing nonlinear dynamic stochastic models easily," Discussion Paper, Tilburg University, Center for Economic Research 1995-97, Tilburg University, Center for Economic Research.
  8. Christiano, Lawrence & Ilut, Cosmin & Motto, Roberto & Rostagno, Massimo, 2008. "Monetary policy and stock market boom-bust cycles," Working Paper Series, European Central Bank 0955, European Central Bank.
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Cited by:
  1. Kobayashi Keiichiro & Nutahara Kengo, 2010. "Nominal Rigidities, News-Driven Business Cycles, and Monetary Policy," The B.E. Journal of Macroeconomics, De Gruyter, De Gruyter, vol. 10(1), pages 1-26, September.
  2. Paul Beaudry & Franck Portier, 2014. "News Driven Business Cycles: Insights and Challenges," 2014 Meeting Papers, Society for Economic Dynamics 289, Society for Economic Dynamics.
  3. INABA Masaru & KOBAYASHI Keiichiro, 2009. "Quantitative Significance of Collateral Constraints as an Amplification Mechanism," Discussion papers, Research Institute of Economy, Trade and Industry (RIETI) 09035, Research Institute of Economy, Trade and Industry (RIETI).
  4. Keiichiro Kobayashi & Kengo Nutahara, 2007. "Collateralized capital and news-driven cycles," Economics Bulletin, AccessEcon, vol. 5(18), pages 1-9.
  5. NUTAHARA Kengo, 2010. "Asset Prices and Monetary Policy in a Sticky-Price Economy with Financial Frictions," Discussion papers, Research Institute of Economy, Trade and Industry (RIETI) 10060, Research Institute of Economy, Trade and Industry (RIETI).
  6. Kobayashi, Keiichiro, 2011. "The Diamond-Rajan Bank Runs in a Production Economy," PIE/CIS Discussion Paper, Center for Intergenerational Studies, Institute of Economic Research, Hitotsubashi University 515, Center for Intergenerational Studies, Institute of Economic Research, Hitotsubashi University.
  7. KOBAYASHI Keiichiro, 2009. "Asset-Price Collapse and Market Disruption - A model of financial crises -," Discussion papers, Research Institute of Economy, Trade and Industry (RIETI) 09045, Research Institute of Economy, Trade and Industry (RIETI).

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