Financial Innovations and Macroeconomic Volatility

Urban Jermann and Vincenzo Quadrini

No 12308, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: The volatility of US business cycles has declined during the last two decades. During the same period the financial structure of firms has become more volatile. In this paper we develop a model in which financial factors play a key role in generating economic fluctuations. Innovations in financial markets allow for greater financial flexibility and generate a lower volatility of output together with a higher volatility in the financial structure of firms.

JEL-codes: E3 G1 G3 (search for similar items in EconPapers)
Date: 2006-06
New Economics Papers: this item is included in nep-bec, nep-cba, nep-dge, nep-fin, nep-fmk and nep-mac
Note: EFG
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Citations: View citations in EconPapers (91)

Published as Urban Jermann & Vincenzo Quadrini, 2006. "Financial innovations and macroeconomic volatility," Proceedings, Federal Reserve Bank of San Francisco, issue Nov.

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Related works:
Working Paper: Financial Innovations and Macroeconomic Volatility (2007)
Journal Article: Financial innovations and macroeconomic volatility (2006)
Working Paper: Financial Innovations and Macroeconomic Volatility (2006)
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