Survey on Financial Market Frictions and Dynamic Stochastic General Equilibrium Models

Madalin Viziniuc
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Madalin Viziniuc: Doctoral School of Finance, Bucharest University of Economic Studies, 6 Piata Romana, 1st district, Bucharest, 010374 Romania.

International Journal of Economics and Financial Issues, 2015, vol. 5, issue 2, 454-460

Abstract: This survey reviews the research regarding the general frameworks used for the specification of financial market frictions in dynamic stochastic general equilibrium (DSGE) models. Within the related literature, financial frictions are considered to be the prime candidates for endogenous amplification of small transitory non-financial shocks. The latest financial crisis has changed a number of macroeconomic paradigms and DSGE models were not left untouched. Pre-crisis macroeconomic models neglected the financial markets due to the fact the most economists considered them to function perfectly. As economic events pointed out the contrary, numerous research papers that tackle this problem are available in literature, therefore, this rapidly growth of literature motivates this survey.

Keywords: Dynamic Stochastic General Equilibrium Models; Financial Market Frictions; Financial Accelerator; Collateral Constraint; Survey (search for similar items in EconPapers)
JEL-codes: E21 E22 E32 E44 E59 (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eco:journ1:2015-02-16

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