An economic model for the interpretation of business cycles and the efficiency of monetary policy
Eleni Dalla and
The Journal of Economic Asymmetries, 2016, vol. 14, issue PA, 29-38
This paper attempts to investigate business cycles, assuming that both national income and the interest rate on loans are determined jointly in the product market and the banking sector. For this reason, a second order accelerator model in discrete time is combined with a two-stage Cournot game with scope economies for the oligopolistic banking sector. The presence of scope economies increases liquidity and hence, the destabilizing influence of the financial sector, affecting in turn the effectiveness of monetary policy. In addition, the model is calibrated to assess the ability of our system to interpret the cyclical path of national income over time and the possibility of the latter's convergence towards its steady-state. Performing a simulation process, we present the implications of different permanent shocks of monetary policy on national income diachronically.
Keywords: Business cycles; Bank behavior; Monetary policy (search for similar items in EconPapers)
JEL-codes: E32 E10 E52 G21 (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed
Downloads: (external link)
Full text for ScienceDirect subscribers only
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:eee:joecas:v:14:y:2016:i:pa:p:29-38
Access Statistics for this article
The Journal of Economic Asymmetries is currently edited by A.G. Malliaris
More articles in The Journal of Economic Asymmetries from Elsevier
Bibliographic data for series maintained by Nithya Sathishkumar ().