Growth, Slowdowns, and Recoveries

Francesco Bianchi, Howard Kung and Gonzalo Morales

No 10291, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: We construct and estimate an endogenous growth model with debt and equity financing frictions to understand the relation between business cycle fluctuations and long-term growth. The presence of spillover effects from R&D imply an endogenous relation between productivity growth and the state of the economy. A large contractionary shock to equity financing in the 2001 recession led to a persistent growth slowdown that was more severe than in the 2008 recession. Equity (debt) financing shocks are more important for explaining R&D (physical) investment. Therefore, these two financing shocks affect the economy over different horizons.

Keywords: Financial frictions; Endogenous growth; Business cycles; Bayesian methods (search for similar items in EconPapers)
Date: 2014-12
New Economics Papers: this item is included in nep-dge, nep-fdg and nep-mic
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Citations: View citations in EconPapers (26)

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Related works:
Journal Article: Growth, slowdowns, and recoveries (2019)
Working Paper: Growth, Slowdowns, and Recoveries (2015)
Working Paper: Growth, Slowdowns, and Recoveries (2014)
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