Financial Accelerator Mechanism: Evidence for Colombia

Martha López and Norberto Rodríguez N. ()
Authors registered in the RePEc Author Service: Norberto Rodríguez ()

Borradores de Economia from Banco de la Republica de Colombia

Abstract: Colombia experienced a deep recession in 1999-2003. Growth slowed by 4.2%, and investment by 34.6%. Was the severity of the recession due to a financial accelerator mechanism á la Bernanke, Gertler, and Gilchrist (1999)? To answer this question, this paper estimates a dynamic stochastic general equilibrium model with credit-market imperfections for the Colombian economy using Bayesian methods. The results show that balance-sheet effects played an important role in explaining recent Colombian recession; the financial accelerator mechanism turns out to be quantitatively significant accounting for about 50 percent of the total reduction in output after a monetary policy tightening.

Keywords: DSGE modelling; Financial Accelerator; Bayesian Estimation. (search for similar items in EconPapers)
JEL-codes: C11 C15 E32 E44 E52 (search for similar items in EconPapers)
Date: 2008-01
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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https://doi.org/10.32468/be.481 (application/pdf)

Related works:
Working Paper: Financial Accelerator Mechanism: Evidence for Colombia (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:bdr:borrec:481

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