The macroeconomics of credit and labor market imperfections

Philippe Weil and Etienne Wasmer

ULB Institutional Repository from ULB -- Universite Libre de Bruxelles

Abstract: Credit market imperfections influence the labor market and aggregate economic activity. In turn, macroeconomic factors have an impact on the credit sector. To assess these effects in a tractable general-equilibrium framework, we introduce endogenous search frictions, in the spirit of Peter Diamond (1990), in both credit and labor markets. We demonstrate that credit frictions amplify macroeconomic volatility through a financial accelerator. The magnitude of this general-equilibrium accelerator is proportional to the credit gap, defined as the deviation of actual output from its perfect credit market level. We explore various extensions, notably endogenous wages.

Date: 2004
Note: SCOPUS: re.j
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Published in: The American Economic Review (2004) v.94 n° 4,p.944-963

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Related works:
Working Paper: The Macroeconomics of Credit and Labor Markets Imperfections (2004)
Working Paper: The Macroeconomics of Credit and Labor Markets Imperfections (2004)
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Persistent link: https://EconPapers.repec.org/RePEc:ulb:ulbeco:2013/13436

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