Firm volatility and credit: a macroeconomic analysis
AbstractThis paper examines a tractable real business cycle model with idiosyncratic productivity shocks and binding credit constraints on entrepreneurs. The model shows how firm volatility increases in combination with credit market development. It further generates the observed comovement of credit and firm volatility with output at business cycle frequencies in response to aggregate productivity shocks.
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Bibliographic InfoArticle provided by Federal Reserve Bank of St. Louis in its journal Review.
Volume (Year): (2009)
Issue (Month): Mar ()
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- Yi Wen & Pengfei Wang, 2010.
"Financial Development and Economic Volatility:A Unified Explanation,"
2010 Meeting Papers
66, Society for Economic Dynamics.
- Pengfei Wang & Yi Wen, 2009. "Financial development and economic volatility: a unified explanation," Working Papers 2009-022, Federal Reserve Bank of St. Louis.
- Hirano, Tomohiro & Yanagawa, Noriyuki, 2010. "Asset Bubbles, Endogenous Growth, and Financial Frictions," MPRA Paper 24085, University Library of Munich, Germany.
- Petra Marotzke, 2011. "Macroeconomic Stability and Wage Inequality: A Model with Credit and Labor Market Frictions," Working Paper Series of the Department of Economics, University of Konstanz 2011-38, Department of Economics, University of Konstanz.
- Shalini Mitra, 2012. "Does Financial Development Cause Higher Firm Volatility and Lower Aggregate Volatility?," Working papers 2012-07, University of Connecticut, Department of Economics.
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