Financial Constraints, Endogenous Markups, and Self-fulfilling Equilibria
Jess Benhabib () and
Pengfei Wang ()
No 18074, NBER Working Papers from National Bureau of Economic Research, Inc
We show that self-fulfilling equilibria and indeterminacy can easily arise in a simple financial accelerator model with reasonable parameter calibrations and without increasing returns in production. A key feature for generating indeterminacy in our model is the countercyclical markup due to the procyclical loan to output ratio. We illustrate, via simulations, that our financial accelerator model can generate rich business cycle dynamics, including hump-shaped output in response to demand shocks as well as serial autocorrelation in output growth rates.
JEL-codes: E02 E2 E44 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dge, nep-fdg and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed
Published as Benhabib, Jess & Wang, Pengfei, 2013. "Financial constraints, endogenous markups, and self-fulfilling equilibria," Journal of Monetary Economics, Elsevier, vol. 60(7), pages 789-805.
Downloads: (external link)
Journal Article: Financial constraints, endogenous markups, and self-fulfilling equilibria (2013)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:18074
Ordering information: This working paper can be ordered from
Access Statistics for this paper
More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().