Uncertainty Shocks and Firm Dynamics: Search and Monitoring in the Credit Market

Thomas Brand, Marlène Isoré and Fabien Tripier

No 1707, CEPREMAP Working Papers (Docweb) from CEPREMAP

Abstract: We develop a business cycle model with gross flows of firm creation and destruction. The credit market is characterized by two frictions. First, entrepreneurs undergo a costly search for intermediate funding to create a firm. Second, upon a match, a costly-state-verification contract is set up. When defaults occurs, banks monitor firms, seize their assets, and a fraction of financial relationships are severed. The model is estimated using Bayesian methods for the U.S. economy. Among other shocks, uncertainty in productivity turns out to be a major contributor to both macro-financial aggregates and firm dynamics.

Keywords: Uncertainty shocks; Financial frictions; Search and Matching; Business Cycles; Firm Dynamics (search for similar items in EconPapers)
Pages: 59 pages
Date: 2017-12
New Economics Papers: this item is included in nep-bec, nep-dge, nep-ent and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Related works:
Journal Article: Uncertainty shocks and firm creation: Search and monitoring in the credit market (2019)
Working Paper: Uncertainty Shocks and Firm Creation: Search and Monitoring in the Credit Market (2018)
Working Paper: Uncertainty shocks and firm dynamics: Search and monitoring in the credit market (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:cpm:docweb:1707

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