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The Financial Accelerator from a Business Cycle Accounting Perspective

Arturo Antón-Sarabia ()

No 2007-06, Working Papers from Banco de México

Abstract: In a recent paper, Gertler, Gilchrist and Natalucci (2006) report that the financial accelerator mechanism may account for about half of the fall in output and investment observed during the Korean crisis of 1997-1998. Using the business cycle accounting method of Chari, Kehoe and McGrattan (2006a), this paper finds that such a result is very sensitive to the value of Tobin’s q elasticity. The implication is that the adjustment cost function may be crucial in terms of the relative importance of distortions for explaining business cycle fluctuations.

Keywords: Business cycle accounting; Financial accelerator; Korean crisis (search for similar items in EconPapers)
JEL-codes: E1 E32 F4 (search for similar items in EconPapers)
Date: 2007-03
New Economics Papers: this item is included in nep-dge and nep-mac
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