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How We Might Model a Credit Squeeze, and Draw some Policy Implications for Responding to it


  • Peter Sinclair


This paper endeavours to illustrate the consequences of a credit squeeze by inserting a standard model of retail banks into some familiar macroeconomic models. Some possible policy conclusions are drawn about the benefits of incentives to increase lending at these times, and to reduce it in much better times.

Suggested Citation

  • Peter Sinclair, 2008. "How We Might Model a Credit Squeeze, and Draw some Policy Implications for Responding to it," Discussion Papers 08-10, Department of Economics, University of Birmingham.
  • Handle: RePEc:bir:birmec:08-10

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    References listed on IDEAS

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    More about this item


    credit famine; credit crunch;

    JEL classification:

    • D53 - Microeconomics - - General Equilibrium and Disequilibrium - - - Financial Markets
    • D86 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Economics of Contract Law
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill


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