Expectation driven business cycles with limited enforcement

Karl Walentin

Economics Letters, 2014, vol. 124, issue 2, 300-303

Abstract: We explore shocks to expected future productivity in a model with limited enforcement of financial contracts. A microfounded collateral constraint implies that good news about future productivity yield an increase in stock prices, available credit and a general economic expansion.

Keywords: News shocks; Collateral constraints; Stock prices (search for similar items in EconPapers)
JEL-codes: E22 E32 E44 (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (6)

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Related works:
Working Paper: Expectation Driven Business Cycles with Limited Enforcement (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:124:y:2014:i:2:p:300-303

DOI: 10.1016/j.econlet.2014.06.006

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