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On the amplification role of collateral constraints

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  • Mendicino, Caterina

Abstract

This letter explores the role of costly liquidation of the collateralized asset in a stochastic version of the Kiyotaki and Moore (1997) model. We document that the degree of inefficiency in the debt enforcement procedure plays a key role in the endogenous amplification of productivity shocks generated by collateral constraints.

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Bibliographic Info

Article provided by Elsevier in its journal Economics Letters.

Volume (Year): 117 (2012)
Issue (Month): 2 ()
Pages: 429-435

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Handle: RePEc:eee:ecolet:v:117:y:2012:i:2:p:429-435

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Web page: http://www.elsevier.com/locate/ecolet

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Keywords: Business cycle; Debt enforcement procedures; Endogenous borrowing limits;

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Cited by:
  1. Jan Vlcek & Scott Roger, 2012. "Macrofinancial Modeling At Central Banks," IMF Working Papers 12/21, International Monetary Fund.

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