A Macroeconomic Model with Financially Constrained Producers and Intermediaries

Vadim Elenev, Tim Landvoigt and Stijn Van Nieuwerburgh

No 24757, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: How much capital should financial intermediaries hold? We propose a general equilibrium model with a financial sector that makes risky long-term loans to firms, funded by deposits from savers. Government guarantees create a role for bank capital regulation. The model captures the sharp and persistent drop in macro-economic aggregates and credit provision as well as the sharp change in credit spreads observed during the Great Recession. Policies requiring intermediaries to hold more capital reduce financial fragility, reduce the size of the financial and non-financial sectors, and locally increase macro-economic volatility. They redistribute wealth from savers to the owners of banks and non-financial firms. Current capital requirements are close to optimal.

JEL-codes: E02 E1 E20 E44 E6 G12 G18 G21 (search for similar items in EconPapers)
Date: 2018-06
New Economics Papers: this item is included in nep-dge, nep-fdg and nep-mac
Note: AP CF EFG ME
References: Add references at CitEc
Citations: View citations in EconPapers (39)

Published as Vadim Elenev & Tim Landvoigt & Stijn Van Nieuwerburgh, 2021. "A Macroeconomic Model With Financially Constrained Producers and Intermediaries," Econometrica, Econometric Society, vol. 89(3), pages 1361-1418, May.

Downloads: (external link)
http://www.nber.org/papers/w24757.pdf (application/pdf)

Related works:
Journal Article: A Macroeconomic Model With Financially Constrained Producers and Intermediaries (2021)
Working Paper: A Macroeconomic Model with Financially Constrained Producers and Intermediaries (2017)
Working Paper: A Macroeconomic Model with Financially Constrained Producers and Intermediaries (2016)
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:nbr:nberwo:24757

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w24757

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().