Do Capital Market Imperfections Exacerbate Output Fluctuations ?

Philippe Bacchetta and CRamon Caminal

Cahiers de Recherches Economiques du Département d'économie from Université de Lausanne, Faculté des HEC, Département d’économie

Abstract: We develop a dynamic general equilibrium macroeconomic model where a proportion of firms are credit constrained due to asymmetric information. In general, a macroeconomic shock has additional effects created by a reallocation of funds between credit-constrained and unconstrained firms. We show, however, that the output response to shocks is not necessarily amplified and can be dampened by the presence of asymmetric information.

Keywords: credit market imperfection; agency costs; business cycles (search for similar items in EconPapers)
JEL-codes: E32 E44 (search for similar items in EconPapers)
Pages: 30 pages
Date: 1996-05
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Citations: View citations in EconPapers (15)

Published in European Economic Review, vol.44, 2000, pp. 449-468

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Related works:
Journal Article: Do capital market imperfections exacerbate output fluctuations? (2000)
Working Paper: Do Capital Market Imperfections Exacerbate Output Fluctuations? (1996)
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Persistent link: https://EconPapers.repec.org/RePEc:lau:crdeep:9612

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