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Abstract

Kiyotaki and Moore (1997) have stressed that an amplification-persistence trade-off arises when collateral constraints on borrowing interact with lumpy investment. In this paper, I confirm by way of example that collateral constraints are not by themselves responsible for such a deceptive trade-off. More precisely, I show in a standard general-equilibrium two-agent model that the amplification and persistence of the impact of temporary shocks go hand in hand. Unlike Kiyotaki-Moore's, the economy features concave utility and production functions, an endogenous interest rate and neo-classical input accumulation

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Bibliographic Info

Paper provided by HAL in its series Working Papers with number halshs-00439243.

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Date of creation: 2009
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Handle: RePEc:hal:wpaper:halshs-00439243

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Related research

Keywords: collateral constraints; amplification and persistence of aggregate shocks;

Other versions of this item:

This paper has been announced in the following NEP Reports:

• NEP-ALL-2009-12-11 (All new papers)
• NEP-BEC-2009-12-11 (Business Economics)
• NEP-DGE-2009-12-11 (Dynamic General Equilibrium)
• NEP-MAC-2009-12-11 (Macroeconomics)

References

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1. Patrick-Antoine Pintus, 2009. "Collateral constraints and the amplification-persistence trade-off," Working Papers halshs-00439243, HAL.
   
   • Pintus, Patrick A., 2011. "Collateral constraints and the amplification-persistence trade-off," Economics Letters, Elsevier, vol. 110(1), pages 64-66, January.
2. Kiyotaki, Nobuhiro & Moore, John, 1997. "Credit Cycles," Journal of Political Economy, University of Chicago Press, vol. 105(2), pages 211-48, April.
   
   • Nobuhiro Kiyotaki & John Moore, 1995. "Credit Cycles," NBER Working Papers 5083, National Bureau of Economic Research, Inc.
   • Ryo Kato, 2003. "Matlab code for Kiyotaki-Moore credit cycles," QM&RBC Codes 113, Quantitative Macroeconomics & Real Business Cycles.
   • John Moore & Nobuhiro Kiyotaki, . "Credit Cycles," Discussion Papers 1995-5, Edinburgh School of Economics, University of Edinburgh.
3. Juan Cordoba & Marla Ripoll, 2002. "Credit Cycles Redux," Macroeconomics 0210004, EconWPA.
   
   • Juan-Carlos Cordoba & Marla Ripoll, 2004. "Credit Cycles Redux," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 45(4), pages 1011-1046, November.
   • Cordoba, Juan & Ripoll, Marla, 2002. "Credit Cycles Redux," Working Papers 2002-07, Rice University, Department of Economics.
   • Cordoba, Juan Carlos & Ripoll, Marla, 2010. "Credit Cycles Redux," Staff General Research Papers 32122, Iowa State University, Department of Economics.
4. Pierre‐André Chiappori & Monica Paiella, 2011. "Relative Risk Aversion Is Constant: Evidence From Panel Data," Journal of the European Economic Association, European Economic Association, vol. 9(6), pages 1021-1052, December.
   
   • Pierre-André Chiappori & Monica Paiella, 2008. "Relative Risk Aversion Is Constant: Evidence from Panel Data," Discussion Papers 5_2008, D.E.S. (Department of Economic Studies), University of Naples "Parthenope", Italy.

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Cited by:

1. Patrick-Antoine Pintus, 2009. "Collateral constraints and the amplification-persistence trade-off," Working Papers halshs-00439243, HAL.
   
   • Pintus, Patrick A., 2011. "Collateral constraints and the amplification-persistence trade-off," Economics Letters, Elsevier, vol. 110(1), pages 64-66, January.

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