CREDIT MARKET FRICTIONS AND THE AMPLIFICATION-PERSISTENCE TRADE-OFF

Patrick Pintus ()

Working Papers from HAL

Abstract: The issue of how endogenous borrowing constraints lead to the amplification and persistence of aggregate shocks is revisited in this paper. Specifically, I show that an amplification-persistence trade-off is embodied in the setting proposed by Kiyotaki and Moore (1997). The key point is that while complex unit roots associated with persistence of temporary shocks require the fraction of credit-constrained firms to be small enough, large amplification relies on the opposite condition. Incidentally, I confirm the occurrence of periodic and quasi-periodic cycles around the determinate steady state.

Keywords: Imperfect credit markets; complex unit roots; persistence and amplification; endogenous cycles (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cba
Date: 2009-01-15
Note: View the original document on HAL open archive server: http://halshs.archives-ouvertes.fr/halshs-00353602/en/
View list of references

Downloads: (external link)
http://halshs.archives-ouvertes.fr/docs/00/35/36/02/PDF/2007-26.pdf (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: http://EconPapers.repec.org/RePEc:hal:wpaper:halshs-00353602_v1

Access Statistics for this paper

More papers in Working Papers from HAL
Series data maintained by CCSD ().