Credit Constraint in General Equilibrium: Experimental Results
Our work attempts to investigate the influence of credit tightness or expansion on activity and relative prices in a multimarket set-up. We report on some double- auction, two-market experiments where subjects had to satisfy an inequality involving the use of credit. The experiments display two regimes, characterized by high and low credit availability. The critical value of credit at the common boundary of the two regimes has a compelling interpretation as the maximal credit use at the Arrow-Debreu equilibrium of the abstract economy naturally associated to our experimental environment. Our main results are that changes in the availability of credit: (a): have minor and unsystematic effects on quantities and relative prices in the high-credit regime, (b): have substantial effects, both on quantities and relative prices, in the low-credit regime.
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- Juan P. Nicolini, 1993. "More on the time inconsistency of optimal monetary policy," Economics Working Papers 56, Department of Economics and Business, Universitat Pompeu Fabra.
- Walter Garcia-Fontes & Hugo Hopenhayn, 2000.
"Entry restrictions and the determination of quality,"
Spanish Economic Review,
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- Xavier Calsamiglia & Alan Kirman, 1991.
"A unique informationally efficient and decentralized mechanism with fair outcomes,"
Economics Working Papers
7, Department of Economics and Business, Universitat Pompeu Fabra.
- Calsamiglia, Xavier & Kirman, Alan, 1993. "A Unique Informationally Efficient and Decentralized Mechanism with Fair Outcomes," Econometrica, Econometric Society, vol. 61(5), pages 1147-72, September.
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