Collateral constraints and the amplification-persistence trade-off

Patrick Pintus

Working Papers from HAL

Abstract: Kiyotaki and Moore (1997) have stressed that an amplification-persistence trade-off arises when collateral constraints on borrowing interact with lumpy investment. In this paper, I confirm by way of example that collateral constraints are not by themselves responsible for such a deceptive trade-off. More precisely, I show in a standard general-equilibrium two-agent model that the amplification and persistence of the impact of temporary shocks go hand in hand. Unlike Kiyotaki-Moore's, the economy features concave utility and production functions, an endogenous interest rate and neo-classical input accumulation

Keywords: collateral constraints; amplification and persistence of aggregate shocks (search for similar items in EconPapers)
Date: 2009
Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-00439243
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Journal Article: Collateral constraints and the amplification-persistence trade-off (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:wpaper:halshs-00439243

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