A Model of Slow Recoveries from Financial Crises

Albert Queraltó
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Albert Queraltó: https://www.federalreserve.gov/econres/albert-queralto.htm

No 1097, International Finance Discussion Papers from Board of Governors of the Federal Reserve System (U.S.)

Abstract: This paper documents highly persistent effects of financial crises on output, labor productivity and employment in a sample of emerging economies. To address these facts, it introduces a quantitative macroeconomic model that includes endogenous TFP growth through firm creation. Firm creators obtain funding from a financial intermediation sector which is subject to frictions. These frictions become especially severe in a financial crisis, increasing the cost of credit for firm creators and thereby lowering the growth rate of aggregate TFP. As a consequence, the model produces medium-run dynamics following crises that are in line with the data.

Keywords: Business cycles; financial crises; total factor productivity (search for similar items in EconPapers)
Pages: 46 pages
Date: 2013-12-18
New Economics Papers: this item is included in nep-dge, nep-fdg and nep-opm
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:fip:fedgif:1097

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