Credit Cycles Redux

Juan Cordoba () and Marla Ripoll ()

Macroeconomics from EconWPA

Abstract: Theoretical studies have shown that under unorthodox assumptions on preferences and production technologies, collateral constraints can act as a powerful amplification and propagation mechanism of exogenous shocks. We investigate whether or not this result hold under more standard assumptions. We find that collateral constraints generate a typically small output amplification. Large amplification is a "knife- edge" type of result.

Keywords: Credit Constraints; financial constraints; business cycles; heterogenous agents; amplification (search for similar items in EconPapers)
JEL-codes: E32 E44 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dge
Date: Written 2002-10-16
Note: Type of Document - pdf; pages: 35 ; figures: included
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http://129.3.20.41/eps/mac/papers/0210/0210004.pdf (application/pdf)

Related works:
Working Paper: Credit Cycles Redux (2002)
Journal Article: CREDIT CYCLES REDUX (2004)
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