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Capital Market Frictions, Business Cycle and Monetary Transmission

Olivier Pierrard ()

DNB Working Papers from Netherlands Central Bank, Research Department

Abstract: Empirical evidence shows that some firms may be capital constraint because of capital market imperfections. We therefore extend the business cycle models with frictions 'a la Pissarides on the labour market by also introducing symmetric frictions on the capital market. We show that the capital market frictions (and their interactions with the labour market frictions) improve the statistical properties of the model and generate a financial accelerator.

Keywords: capital market frictions; business cycle; monetary transmission (search for similar items in EconPapers)
JEL-codes: E13 E24 E51 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cba, nep-dge, nep-fmk and nep-mac
Date: 2005-02
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