Financial Accelerator Mechanism: Evidence for Colombia
AbstractColombia experienced a deep recession in 1999-2003. Growth slowed by 4.2%, and investment by 34.6%. Was the severity of the recession due to a ¯nan- cial accelerator mechanism µa la Bernanke, Gertler, and Gilchrist (1999)? To answer this question, this paper estimates a dynamic stochastic general equilib- rium model with credit-market imperfections for the Colombian economy using Bayesian methods. The results show that balance-sheet e®ects played an im- portant role in explaining recent Colombian recession; the ¯nancial accelerator mechanism turns out to be quantitatively signi¯cant accounting for about 50 percent of the total reduction in output after a monetary policy tightening.
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Date of creation: 30 Jan 2008
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- Martha R. López P & Norberto Rodríguez N., . "Financial Accelerator Mechanism: Evidence for Colombia," Borradores de Economia 481, Banco de la Republica de Colombia.
- Bay - Schools of Economic Thought and Methodology - - - - -
- Est - Macroeconomics and Monetary Economics - - - - -
- Cla - Mathematical and Quantitative Methods - - - - -
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