Business Cycles and Financial Crises: A Model of Entrepreneurs and Financiers

Takuma Kunieda and Akihisa Shibata

MPRA Paper from University Library of Munich, Germany

Abstract: A dynamic general equilibrium model with infinitely lived entrepreneurs and financiers is developed to investigate a possible mechanism that explains business cycles and a financial crisis. The highest growth rate is achievable only if financiers coexist with entrepreneurs, given a certain extent of financial market imperfections. However, if financiers coexist with entrepreneurs, the economy is highly likely to go into a financial crisis for some parameter values. These two-sided implications of the coexistence of entrepreneurs and financiers explain why both instability and high growth are frequently observed in modern economies.

Keywords: Endogenous business cycles; Financial crisis; Economic boom; Financial market imperfections (search for similar items in EconPapers)
JEL-codes: E32 O16 O40 (search for similar items in EconPapers)
Date: 2012-07-12
New Economics Papers: this item is included in nep-dge, nep-ent, nep-fdg and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://mpra.ub.uni-muenchen.de/40310/1/MPRA_paper_40310.pdf original version (application/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:pra:mprapa:40310

Access Statistics for this paper

More papers in MPRA Paper from University Library of Munich, Germany Ludwigstraße 33, D-80539 Munich, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Joachim Winter ().