We augment a RBC model with capital and labor market frictions. We follow the approach of Wasmer and Weil (2004) which model market imperfections as search processes : firms must sequentially find a match with a bank first and then with a worker in order to start production. We show that the interactions between labor and capital market frictions may generate a financial accelerator or decelerator, depending on a parameter condition. We compare our model with US National Accounts data and with the empirical findings of DellÕAriccia and Garibaldi (2005) : we find that the financial accelerator as well as real wage rigidities help in improving the statistical propqerties of the model
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Jerome Fahrer & John Simon, 1995.
"Capital Constraints and Employmen,"
Australian Economic Review,
The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 28(1), pages 23-34.
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Giovanni Dell'Ariccia & Pietro Garibaldi, 2005.
"Gross Credit Flows,"
Review of Economic Studies,
Blackwell Publishing, vol. 72(3), pages 665-685, 07.
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