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Financial shocks and the real economy in a nonlinear world: a survey of the theoretical and empirical literature

Listed author(s):
  • Andrea Silvestrini

    ()

    (Bank of Italy)

  • Andrea Zaghini

    ()

    (Bank of Italy)

In this paper we present an overview of theoretical and empirical contributions exploring the inter-linkages between financial factors and real economic activity. We first revisit the main theoretical approaches that allow financial frictions to be embedded into general equilibrium models, and then we survey, from an empirical perspective, the most recent papers focusing on macro-financial linkages, with a particular emphasis on works dealing with parameter time variation and other types of nonlinearities. We conclude by discussing some policy implications and suggesting directions for future research.

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File URL: http://www.bancaditalia.it/pubblicazioni/qef/2015-0255/QEF_255.pdf
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Paper provided by Bank of Italy, Economic Research and International Relations Area in its series Questioni di Economia e Finanza (Occasional Papers) with number 255.

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Date of creation: Jan 2015
Handle: RePEc:bdi:opques:qef_255_15
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