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Incorporating financial frictions into new-generation macro models

Author

Listed:
  • Giovanni Lombardo
  • Peter McAdam

Abstract

Recent work extends the New Area Wide Model to include “fi nancial frictions” in housing and investment. This article describes the model, its data and simulation properties and shows that extending the model in this fashion offers additional perspectives of the reaction of the model to shocks. JEL Classification: E0

Suggested Citation

  • Giovanni Lombardo & Peter McAdam, 2010. "Incorporating financial frictions into new-generation macro models," Research Bulletin, European Central Bank, vol. 9, pages 13-16.
    • Handle: RePEc:ecb:ecbrbu:2010:0009:4
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    File URL: http://www.ecb.europa.eu/pub/pdf/other/researchbulletin09en.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    financial frictions; macro models;

    JEL classification:

    • E0 - Macroeconomics and Monetary Economics - - General

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