Financial Markets and Fluctuations in Uncertainty
AbstractResearchers have documented that in the recent financial crisis the large decline in economic activity and credit has been accompanied by a large increase in the dispersion of growth rates across firms. We build a quantitative general equilibrium model in which financial frictions interact with increases in uncertainty at the firm level to generate a contraction in economic activity and a large increase in the dispersion of growth rates across firms. We find that our model can generate about 67% of the decline in output of the Great Recession of 2007. A promising feature of our model is that it generates large labor wedges, a feature of the recent data on business cycles.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Society for Economic Dynamics in its series 2011 Meeting Papers with number 896.
Date of creation: 2011
Date of revision:
Contact details of provider:
Postal: Society for Economic Dynamics Christian Zimmermann Economic Research Federal Reserve Bank of St. Louis PO Box 442 St. Louis MO 63166-0442 USA
Web page: http://www.EconomicDynamics.org/society.htm
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Abel, Andrew B & Eberly, Janice C, 1996.
"Optimal Investment with Costly Reversibility,"
Review of Economic Studies,
Wiley Blackwell, vol. 63(4), pages 581-93, October.
- Krusell, P & Smith Jr, A-A, 1995.
"Income and Wealth Heterogeneity in the Macroeconomic,"
RCER Working Papers
399, University of Rochester - Center for Economic Research (RCER).
- Per Krusell & Anthony A. Smith & Jr., 1998. "Income and Wealth Heterogeneity in the Macroeconomy," Journal of Political Economy, University of Chicago Press, vol. 106(5), pages 867-896, October.
- Per Krusell & Anthony A. Smith, Jr., . "Income and Wealth Heterogeneity in the Macroeconomy," GSIA Working Papers 1997-37, Carnegie Mellon University, Tepper School of Business.
- Arellano, Cristina & Bai, Yan & Zhang, Jing, 2012.
"Firm dynamics and financial development,"
Journal of Monetary Economics,
Elsevier, vol. 59(6), pages 533-549.
- Cristina Arellano & Yan Bai & Jing Zhang, 2009. "Firm dynamics and financial development," Staff Report 392, Federal Reserve Bank of Minneapolis.
- Yan Bai & Jing Zhang & Cristina Arellano, 2009. "Firm Dynamics and Financial Development," 2009 Meeting Papers 152, Society for Economic Dynamics.
- Cristina Arellano & Yan Bai & Jing Zhang, 2009. "Firm Dynamics and Financial Development," NBER Working Papers 15193, National Bureau of Economic Research, Inc.
- Thomas F. Cooley & Vincenzo Quadrini, 1999.
"Financial Markets and Firm Dynamics,"
99-14, New York University, Leonard N. Stern School of Business, Department of Economics.
- Ohanian, Lee E. & Raffo, Andrea, 2012.
"Aggregate hours worked in OECD countries: New measurement and implications for business cycles,"
Journal of Monetary Economics,
Elsevier, vol. 59(1), pages 40-56.
- Lee E. Ohanian & Andrea Raffo, 2011. "Aggregate hours worked in OECD countries: new measurement and implications for business cycles," International Finance Discussion Papers 1039, Board of Governors of the Federal Reserve System (U.S.).
- Lee E. Ohanian & Andrea Raffo, 2011. "Aggregate Hours Worked in OECD Countries: New Measurement and Implications for Business Cycles," NBER Working Papers 17420, National Bureau of Economic Research, Inc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Christian Zimmermann).
If references are entirely missing, you can add them using this form.