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Imperfect Information, Credit Markets and Unemployment

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  • Bruce C. Greenwald
  • Joseph E. Stiglitz

Abstract

This paper describes how imperfect information in both capital and labor markets can, in a context of maximizing firms and perfectly flexible prices and wages, give rise to cyclical variations in unemployment whose character closely resembles that of observed business cycles.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 2093.

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Date of creation: Dec 1986
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Publication status: published as Greenwald, Bruce C. and Joseph E. Stiglitz. "Imperfect Information, Credit Markets and Unemployment," European Economic Review, Vol. 31, 1987, pp. 444-45 6.
Handle: RePEc:nbr:nberwo:2093

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References

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  1. Stiglitz, Joseph E, 1985. "Equilibrium Wage Distribution," Economic Journal, Royal Economic Society, vol. 95(379), pages 595-618, September.
  2. Wilson, Charles, 1977. "A model of insurance markets with incomplete information," Journal of Economic Theory, Elsevier, vol. 16(2), pages 167-207, December.
  3. Stiglitz, Joseph E & Weiss, Andrew, 1981. "Credit Rationing in Markets with Imperfect Information," American Economic Review, American Economic Association, vol. 71(3), pages 393-410, June.
  4. Sanford J. Grossman & Oliver D. Hart & Eric Maskin, 1982. "Unemployment with Observable Aggregate Shocks," NBER Working Papers 0975, National Bureau of Economic Research, Inc.
  5. Myers, Stewart C. & Majluf, Nicholas S., 1984. "Corporate financing and investment decisions when firms have information that investors do not have," Journal of Financial Economics, Elsevier, vol. 13(2), pages 187-221, June.
  6. Shapiro, Carl & Stiglitz, Joseph E, 1984. "Equilibrium Unemployment as a Worker Discipline Device," American Economic Review, American Economic Association, vol. 74(3), pages 433-44, June.
  7. Stiglitz, Joseph E, 1976. "The Efficiency Wage Hypothesis, Surplus Labour, and the Distribution of Income in L.D.C.s," Oxford Economic Papers, Oxford University Press, vol. 28(2), pages 185-207, July.
  8. Yellen, Janet L, 1984. "Efficiency Wage Models of Unemployment," American Economic Review, American Economic Association, vol. 74(2), pages 200-205, May.
  9. Stiglitz, Joseph E, 1987. "The Causes and Consequences of the Dependence of Quality on Price," Journal of Economic Literature, American Economic Association, vol. 25(1), pages 1-48, March.
  10. Rothschild, Michael & Stiglitz, Joseph E, 1976. "Equilibrium in Competitive Insurance Markets: An Essay on the Economics of Imperfect Information," The Quarterly Journal of Economics, MIT Press, vol. 90(4), pages 630-49, November.
  11. Salop, Steven C, 1979. "A Model of the Natural Rate of Unemployment," American Economic Review, American Economic Association, vol. 69(1), pages 117-25, March.
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Cited by:
  1. Jürgen Antony & Torben Klarl & Alfred Maußner, 2010. "Firm Heterogeneity, Credit Constraints, and Endogenous Growth," DEGIT Conference Papers c015_045, DEGIT, Dynamics, Economic Growth, and International Trade.
  2. Bhattacharya, Joydeep & Chakraborty, Shankha, 2003. "What Do Information Frictions Do?," Staff General Research Papers 10254, Iowa State University, Department of Economics.
  3. Arnold, Lutz G, 2002. " Financial Market Imperfections, Labor Market Imperfections and Business Cycles," Scandinavian Journal of Economics, Wiley Blackwell, vol. 104(1), pages 105-24.
  4. Greenwald, Bruce C. & Stiglitz, Joseph E., 1989. "Financial Market Imperfections and Productivity Growth," Working Paper Series 206, Research Institute of Industrial Economics.
  5. Sylvain Chabe-Ferret & Julien Gourdon & Mohamed Ali Marouani & Tancrède Voituriez, 2011. "Trade-Induced Changes in Economic Inequality: Assessment Issues and Policy Implications for Developing Countries," Working Papers halshs-00557108, HAL.
  6. Gerhard Clemenz & Mona Ritthaler, 1992. "Credit markets with asymmetric information : a survey," Finnish Economic Papers, Finnish Economic Association, vol. 5(1), pages 12-26, Spring.
  7. van de Klundert, Theo C. M. J. & van Schaik, Anton B. T. M., 1990. "Unemployment persistence and loss of productive capacity: A Keynesian approach," Journal of Macroeconomics, Elsevier, vol. 12(3), pages 363-380.
  8. Amano, Masanori, 1999. "Credit rationing of a Bayesian bank with simple screening technologies," Japan and the World Economy, Elsevier, vol. 11(4), pages 545-556, December.
  9. Rafael Gomez & David K. Foot, 2003. "Age Structure, Income Distribution and Economic Growth," Canadian Public Policy, University of Toronto Press, vol. 29(s1), pages 141-162, January.

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