Credit crunches and credit allocation in a model of entrepreneurship

Marco Bassetto, Marco Cagetti and Mariacristina De Nardi
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Marco Cagetti: https://www.federalreserve.gov/econres/marco-cagetti.htm

No WP-2013-06, Working Paper Series from Federal Reserve Bank of Chicago

Abstract: We study the effects of credit shocks in a model with heterogeneous entrepreneurs, financing constraints, and a realistic firm size distribution. As entrepreneurial firms can grow only slowly and rely heavily on retained earnings to expand the size of their business in this set-up, we show that, by reducing entrepreneurial firm size and earnings, negative shocks have a very persistent effect on real activity. In determining the speed of recovery from an adverse economic shock, the most important factor is the extent to which the shock erodes entrepreneurial wealth.

Keywords: Credit; Entrepreneurship - Econometric models (search for similar items in EconPapers)
Date: 2013
New Economics Papers: this item is included in nep-bec, nep-dge and nep-ent
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Citations: View citations in EconPapers (6)

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Related works:
Journal Article: Credit Crunches and Credit Allocation in a Model of Entrepreneurship (2015)
Working Paper: Credit Crunches and Credit Allocation in a Model of Entrepreneurship (2013)
Working Paper: Credit Crunches and Credit Allocation in a Model of Entrepreneurship (2011)
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