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Inside Money, Credit, and Investment Author info | Abstract | Publisher info | Download info | Related research | Statistics Dressler, Scott
Li, Victor
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This paper presents a monetary explanation for several business-cycle facts: (i) household and business investment are procyclical, (ii) business investment lags household investment, (iii) household investment is positively correlated with M1, and (iv) household credit outstanding is positively correlated with and more volatile than household investment. We develop a dynamic general equilibrium model that features financial intermediaries accepting deposits and providing loans, credit-producing firms, and inside (bank-created) money. It is shown that the transmission of monetary shocks facilitated by credit and inside money creation is able to reconcile these real and monetary observations regarding the cyclical behavior of investment.
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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number
1734.
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Date of creation: Jan 2007Date of revision:
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Article Dressler, Scott J. & Li, Victor E., 2009.
"Inside money, credit, and investment ,"
Journal of Economic Dynamics and Control ,
Elsevier, vol. 33(4), pages 970-984, April.
[Downloadable!] (restricted) Find related papers by JEL classification: G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions E39 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Other C68 - Mathematical and Quantitative Methods - - Mathematical Methods and Programming - - - Computable General Equilibrium Models
This paper has been announced in the following NEP Reports :
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