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

Abstract: 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)
Date: 2008-08
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (15)

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https://doi.org/10.32468/be.525 (application/pdf)

Related works:
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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