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Financial shocks, comovement and credit frictions

Author

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  • Finocchiaro, Daria
  • Mendicino, Caterina

Abstract

In models with frictional financial markets, the specification of the borrowing constraint is crucial to generating comovement between macro variables and asset prices after credit shocks. The interaction between financial frictions and labor demand is key to the results.

Suggested Citation

  • Finocchiaro, Daria & Mendicino, Caterina, 2016. "Financial shocks, comovement and credit frictions," Economics Letters, Elsevier, vol. 143(C), pages 20-23.
    • Handle: RePEc:eee:ecolet:v:143:y:2016:i:c:p:20-23
    DOI: 10.1016/j.econlet.2016.03.017
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    Cited by:

    1. Neri, Stefano & Notarpietro, Alessandro, 2019. "Collateral constraints, the zero lower bound, and the debt–deflation mechanism," Economics Letters, Elsevier, vol. 174(C), pages 144-148.
    2. Davide Melcangi, 2024. "Firms' Precautionary Savings and Employment during a Credit Crisis," American Economic Journal: Macroeconomics, American Economic Association, vol. 16(1), pages 356-386, January.

    More about this item

    Keywords

    Financial shocks; Borrowing constraints; Asset prices; Comovement;
    All these keywords.

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy

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