EconPapers    
Economics at your fingertips  
 

Financial Intermediation, Investment Dynamics, and Business Cycle Fluctuations

Andrea Ajello

American Economic Review, 2016, vol. 106, issue 8, 2256-2303

Abstract: I use micro data to quantify key features of US firm financing. In particular, I establish that a substantial 35 percent of firms' investment is funded using financial markets. I then construct a dynamic equilibrium model that matches these features and fit the model to business cycle data using Bayesian methods. In the model, financial intermediaries enable trades of financial assets, directing funds toward investment opportunities, and charge an intermediation spread to cover their costs. According to the model estimation, exogenous shocks to the intermediation spread explain 25 percent of GDP and 30 percent of investment volatility.

JEL-codes: D22 D92 E32 G21 G31 G32 (search for similar items in EconPapers)
Date: 2016
Note: DOI: 10.1257/aer.20120079
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (41) Track citations by RSS feed

Downloads: (external link)
https://www.aeaweb.org/articles?id=10.1257/aer.20120079 (application/pdf)
https://www.aeaweb.org/content/file?id=1867 (application/zip)
https://www.aeaweb.org/articles/attachments?retrie ... VCYV1fbGUE1gwdxAwYY8 (application/pdf)
https://www.aeaweb.org/articles/attachments?retrie ... z0rOtDM-kEra0YcGlXS- (application/zip)
Access to full text is restricted to AEA members and institutional subscribers.

Related works:
Working Paper: Financial intermediation, investment dynamics and business cycle fluctuations (2012) Downloads
Working Paper: Financial intermediation, investment dynamics and business cycle fluctuations (2011) Downloads
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: https://EconPapers.repec.org/RePEc:aea:aecrev:v:106:y:2016:i:8:p:2256-2303

Ordering information: This journal article can be ordered from
https://www.aeaweb.org/journals/subscriptions

Access Statistics for this article

American Economic Review is currently edited by Esther Duflo

More articles in American Economic Review from American Economic Association Contact information at EDIRC.
Bibliographic data for series maintained by Michael P. Albert ().

 
Page updated 2022-05-20
Handle: RePEc:aea:aecrev:v:106:y:2016:i:8:p:2256-2303