Financial frictions and macroeconomic models: a tour d'horizon
Jagjit Chadha ()
European Journal of Economics and Economic Policies: Intervention, 2014, vol. 11, issue 1, 80-98
The benchmark sticky-price microfounded model yielded a number of insights for monetary policymakers but failed to consider the implications arising from easy money and expanding credit and balance sheets. The promising search for a microfounded workhorse model of financial frictions is still in its early stages. And the ongoing global financial crisis poses a number of questions about both the fundamental causes of business cycle fluctuations and the extent to which monetaryâ€“fiscal and debt management policies should be jointly determined. I assess recent developments and provide some pointers for the micro-founded agenda.
Keywords: DSGE models; financial frictions; monetary and fiscal policy (search for similar items in EconPapers)
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Persistent link: http://EconPapers.repec.org/RePEc:elg:ejeepi:v:11:y:2014:i:1:p80-98
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