Uncertainty shocks and firm dynamics: Search and monitoring in the credit market
Thomas Brand (),
Marlène Isoré () and
Fabien Tripier ()
No 34/2017, Research Discussion Papers from Bank of Finland
We develop a business cycle model with gross flows of firm creation and destruction.The credit market is characterized by two frictions. First,entrepreneurs undergo a costly search for intermediate funding to create a firm. Second, upon a match, a costlystate-verification contract is set up. When defaults occurs, banks monitor firms, seize their assets, and a fraction of financial relationships are severed. The model is estimated using Bayesian methods for the U.S. economy. Among other shocks, uncertainty in productivity turns out to be a major contributor to both macro-financial aggregates and firm dynamics.
JEL-codes: D8 E3 E4 E5 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-bec, nep-dge, nep-ent, nep-mac and nep-sbm
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Published in Available also in Journal of Economic Dynamics and Control 99 ; February ; 2019
Published in http://urn.fi/URN:NBN:fi:bof-201905081176
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Journal Article: Uncertainty shocks and firm creation: Search and monitoring in the credit market (2019)
Working Paper: Uncertainty Shocks and Firm Creation: Search and Monitoring in the Credit Market (2018)
Working Paper: Uncertainty Shocks and Firm Dynamics: Search and Monitoring in the Credit Market (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:bof:bofrdp:2017_034
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