Credit Cycles Redux
AbstractTheoretical studies have shown that under unorthodox assumptions on preference and production technologies, collateral constraints can act as a powerful amplification and propagation mechanism of exogenous shocks. We investigate whether or not this result holds under more standard assumptions. We find that collateral constraints generate a typically small output amplification. Large amplification is a "knife-edge" type of result.
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Bibliographic InfoPaper provided by Iowa State University, Department of Economics in its series Staff General Research Papers with number 32122.
Date of creation: 16 Nov 2010
Date of revision:
Publication status: Published in International Economic Review, November 2004, vol. 45 no. 4, pp. 1011-1046
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Postal: Iowa State University, Dept. of Economics, 260 Heady Hall, Ames, IA 50011-1070
Phone: +1 515.294.6741
Fax: +1 515.294.0221
Web page: http://www.econ.iastate.edu
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Other versions of this item:
- E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
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