Collaterals and Growth Cycles with Heterogeneous Agents

Stefano Bosi (), Mohanad Ismael () and Alain Venditti
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Stefano Bosi: EPEE, University of Evry

No 1438, AMSE Working Papers from Aix-Marseille School of Economics, France

Abstract: We investigate the effects of collaterals and monetary policy on growth rate dynamics in a Ramsey economy where agents have heterogeneous discount factors. We focus on the existence of business-cycle fluctuations based on self-fulfilling prophecies and on the occurrence of deterministic cycles through bifurcations. We introduce liquidity constraints in segmented markets where impatient (poor) agents without collaterals have limited access to credit. We find that an expansionary monetary policy may promote economic growth while making endogenous fluctuations more likely. Conversely, a regulation reinforcing the role of collaterals and reducing the financial market imperfections may enhance the economic growth and stabilize the economy.

Keywords: Collaterals; heterogeneous agents; balanced growth; Endogenous fluctuations; stabilization policies (search for similar items in EconPapers)
Pages: 34 pages
Date: 2014-02-17, Revised 2014-02-17
New Economics Papers: this item is included in nep-dge, nep-mac and nep-mon
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Related works:
Journal Article: Collateral and growth cycles with heterogeneous agents (2016)
Working Paper: Collateral and growth cycles with heterogeneous agents (2016)
Working Paper: Collaterals and Growth Cycles with Heterogeneous Agents (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:aim:wpaimx:1438

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