Resilient forces: The role of intangible capital in mitigating financial contagion dynamics

Çiğdem Ateş-Saygılı

Research in Economics, 2024, vol. 78, issue 4

Abstract: This essay explores the mechanics of financial shocks within a globalized framework, employing a two-country macroeconomic model to distinguish between core and periphery economies. Our research indicates that intangible assets, serving as stable collateral, respond more robustly to economic shocks than traditional physical forms. Moreover, the study highlights the complex transmission mechanisms of productivity and leverage shocks, revealing that while the financial sector effectively assimilates the positive economic outcomes resulting from a productivity shock, leverage shocks, despite depleting capital, paradoxically stimulate overall economic output.

Keywords: Macroeconomics; Intangible capital; Global financial contagion; DSGE model (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:reecon:v:78:y:2024:i:4:s1090944324000656

DOI: 10.1016/j.rie.2024.101001

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