Credit crunch in a model of financial intermediation and occupational choice
AbstractIn this paper, we introduce a dynamic general equilibrium model with numerous and heterogeneous investment projects and endogenous occupational choice to study a credit crunch. The investment decision is determined through the occupational choice of households which is driven by the endogenous accumulation of assets as they face various employment and return risks over a long lifetime. Consistent with empirical evidence, the origin of a credit crunch may be found in the conservative lending policies by banks during periods of financial duress and reduced profitability, but not informational problems as in the extant literature. Monetary policy is shown to be largely ineffective in alleviating the credit crunch, while flexible loan regulation can erase it. Dans ce papier, nous introduisons un modÃ¨le d'Ã©quilibre gÃ©nÃ©ral dynamique avec de nombreux projets d'investissement hÃ©tÃ©rogÃ¨nes et des choix endogÃ¨nes d'occupation pour Ã©tudier une contraction excessive du crÃ©dit. La dÃ©cision d'investissement est dÃ©terminÃ©e par l'intermÃ©diaire du choix occupationnel du mÃ©nage, lui-mÃªme dÃ©pendant de l'accumulation endogÃ¨ne d'actifs en raison de divers risques d'emploi et de rendement sur une longue durÃ©e de vie. Comme cela est indiquÃ© par l'Ã©vidence empirique, l'origine d'une contraction excessive du crÃ©dit peut Ãªtre trouvÃ©e dans les politiques de crÃ©dit conservatrices des banques lors de pÃ©riodes contraintes financiÃ¨res et de profitabilitÃ© rÃ©duite, mais sans les problÃ¨mes d'information nÃ©cessaires dans le reste de la littÃ©rature. La politique monÃ©taire s'avÃ¨re Ãªtre en grande partie inefficace Ã combattre ce resserrement du crÃ©dit, alors qu'une rÃ©glementation flexible des crÃ©dits y parvient.
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Bibliographic InfoArticle provided by Elsevier in its journal Journal of Macroeconomics.
Volume (Year): 26 (2004)
Issue (Month): 4 (December)
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Web page: http://www.elsevier.com/locate/inca/622617
Other versions of this item:
- Mingwei Yuan & Christian Zimmermann, 1999. "Credit Crunch in a Model of Financial Intermediation and Occupational Choice," Cahiers de recherche CREFE / CREFE Working Papers 97, CREFE, Université du Québec à Montréal.
- E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
- E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Capital; Investment; Capacity
- G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
- E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
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