Quantity Rationing of Credit

George Waters

No 20111005, Working Paper Series from Illinois State University, Department of Economics

Abstract: Quantity rationing of credit, when ?firms are denied loans, has greater potential to explain macroeconomics ?fluctuations than borrowing costs. This paper develops a DSGE model with both types of financial frictions. A deterioration in credit market con?fidence leads to a temporary change in the interest rate, but a persistent change in the fraction of ?firms receiving ?financing, which leads to a persistent fall in real activity. Empirical evidence confi?rms that credit market con?fidence, measured by the survey of loan officers, is a signi?cant leading indicator for capacity utilization and output, while borrowing costs, measured by interest rate spreads, is not.

Keywords: Quantity Rationing; Credit; VAR (search for similar items in EconPapers)
JEL-codes: E10 E24 E44 E50 (search for similar items in EconPapers)
Pages: 23 pages
Date: 2011-10
New Economics Papers: this item is included in nep-ban, nep-cba, nep-cfn, nep-dge and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://economics.illinoisstate.edu/RePec/Papers/Qu ... ningofCreditJMCB.pdf First version, 2011 (application/pdf)
Our link check indicates that this URL is bad, the error code is: 404 Not Found (http://economics.illinoisstate.edu/RePec/Papers/QuantityRationingofCreditJMCB.pdf [301 Moved Permanently]--> https://economics.illinoisstate.edu/RePec/Papers/QuantityRationingofCreditJMCB.pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ils:wpaper:20111005

Access Statistics for this paper

More papers in Working Paper Series from Illinois State University, Department of Economics
Bibliographic data for series maintained by B. Andrew Chupp ( this e-mail address is bad, please contact ).