Indexed debt contracts and the financial accelerator
AbstractThis paper addresses the positive and normative implications of indexing risky debt to observable aggregate conditions. These issues are pursued within the context of the celebrated financial accelerator model of Bernanke, Gertler and Gilchrist (1999). The principal conclusions are that the optimal degree of indexation is significant, and that the business cycle properties of the model are altered under this level of indexation.
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Bibliographic InfoPaper provided by Federal Reserve Bank of Cleveland in its series Working Paper with number 1117.
Date of creation: 2011
Date of revision:
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-09-16 (All new papers)
- NEP-BAN-2011-09-16 (Banking)
- NEP-BEC-2011-09-16 (Business Economics)
- NEP-CBA-2011-09-16 (Central Banking)
- NEP-DGE-2011-09-16 (Dynamic General Equilibrium)
- NEP-FMK-2011-09-16 (Financial Markets)
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