Financial Accelerator Mechanism in a Small Open Economy
Martha López (),
Juan Prada Sarmiento () and
Norberto Rodríguez N. ()
Authors registered in the RePEc Author Service: Norberto Rodríguez ()
Borradores de Economia from Banco de la Republica de Colombia
Using Bayesian estimation techniques, we estimate a small open economy DSGE model with credit-market imperfections for the Colombian economy. Using the estimated model we investigate what are the sources of business cycle fluctuations. We show that balance-sheet effects play an important role in explaining recent Colombian business cycles. We then perform a counterfactual exercise that shows that fixed exchange rate regime could have exacerbated the financial distress in the economy between 1998-1999.
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)
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Working Paper: Financial Accelerator Mechanism in a Small Open Economy (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:bdr:borrec:525
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