Growth, slowdowns, and recoveries

Francesco Bianchi, Howard Kung and Gonzalo Morales

Journal of Monetary Economics, 2019, vol. 101, issue C, 47-63

Abstract: We construct and estimate an endogenous growth model with debt and equity financing frictions to understand the relation between business cycle fluctuations and long-term growth. The presence of spillover effects from R&D imply an endogenous relation between productivity growth and the state of the economy. A large contractionary shock to equity financing in the 2001 recession led to a persistent growth slowdown that was more severe than in the 2008 recession. Equity (debt) financing shocks are more important for explaining R&D (physical) investment. Therefore, these two financing shocks affect the economy over different horizons.

Keywords: DSGE model; Endogenous growth; Financial frictions; Business cycles; Bayesian methods (search for similar items in EconPapers)
JEL-codes: C32 E32 O40 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (78)

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Related works:
Working Paper: Growth, Slowdowns, and Recoveries (2015)
Working Paper: Growth, Slowdowns, and Recoveries (2014)
Working Paper: Growth, Slowdowns, and Recoveries (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:moneco:v:101:y:2019:i:c:p:47-63

DOI: 10.1016/j.jmoneco.2018.07.001

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