Credit Constraints and Aggregate Economic Activity Over the Business Cycles

Tamar Giorgadze and Aleksandar Vasilev

EconStor Research Reports from ZBW - Leibniz Information Centre for Economics

Abstract: The paper examines that imperfections in financial markets are themselves a source of macroeconomic fluctuations. Small, temporary shocks to technology or income distribution can generate large fluctuations in output and asset prices and spill over to other sectors. The work is based on the original model by Kiyotaki and Moore (1997). This paper will simulate a one-unit technology shock and study the propagation through the credit channel, evaluating its quantitative impact. While in the Kiyotaki-Moore model there is a linear production function used, we will try to do the derivation using the non-linear function and analyze how it changes the previously obtained result.

Keywords: Credit cycles; aggregate fluctuations (search for similar items in EconPapers)
JEL-codes: E32 (search for similar items in EconPapers)
Date: 2016
New Economics Papers: this item is included in nep-cse, nep-dge and nep-mac
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:esrepo:144572

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