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Credit Crunches and Credit Allocation in a Model of Entrepreneurship

Bassetto, Marco; Cagetti, Marco; Nardi, Mariacristina De - In: Review of Economic Dynamics 18 (2015) 1, pp. 53-76

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, we show that, by reducing...

Persistent link: https://www.econbiz.de/10011160658

A Quantitative Analysis of the US Housing and Mortgage Markets and the Foreclosure Crisis

Chatterjee, Satyajit; Eyigungor, Burcu - In: Review of Economic Dynamics 18 (2015) 2, pp. 165-184

We present a model of long-duration collateralized debt with risk of default. Applied to the housing market, it can match the homeownership rate, the average foreclosure rate, and the lower tail of the distribution of home-equity ratios across homeowners prior to the recent crisis. We stress the...

Persistent link: https://www.econbiz.de/10011268090

Leveraged Borrowing and Boom-Bust Cycles

Pintus, Patrick; Wen, Yi - In: Review of Economic Dynamics 16 (2013) 4, pp. 617-633

that transforms a one-time productivity or financial shock into large and long-lasting boom-bust cycles. The predictions …

Persistent link: https://www.econbiz.de/10010856604

Habit Persistence, Money Growth Rule and Real Indeterminacy

Auray, Stephane; Collard, Fabrice; Feve, Patrick - In: Review of Economic Dynamics 8 (2005) 1, pp. 48-67

This paper studies the dynamic properties of a standard cash-in-advance model modified to include habit persistence over preferences. The central bank is assumed to follow an exogenous money growth rule. We show that equilibrium real indeterminacy is more likely to occur when habit persistence...

Persistent link: https://www.econbiz.de/10005090993

Can Habit Formation be Reconciled with Business Cycle Facts?

Lettau, Martin; Uhlig, Harald - In: Review of Economic Dynamics 3 (2000) 1, pp. 79-99

Many asset pricing puzzles can be explained when habit formation is added to standard preferences. We show that utility functions with a habit then gives rise to a puzzle of consumption volatility in place of the asset pricing puzzles when agents can choose consumption and labor optimally in...

Persistent link: https://www.econbiz.de/10005085526

Heterogeneous Risk Preferences and the Welfare Cost of Business Cycles

Schulhofer-Wohl, Sam - In: Review of Economic Dynamics 11 (2008) 4, pp. 761-780

I study the welfare cost of business cycles in a complete-markets economy where some people are more risk averse than … insurance. These trades reduce the welfare cost of business cycles for everyone. Indeed, the least risk-averse people benefit … from business cycles. Moreover, even infinitely risk-averse people suffer only finite and, in my empirical estimates, very …

Persistent link: https://www.econbiz.de/10005069706

Multi-Dimensional Risk and the Cost of Business Cycles

Krebs, Tom - In: Review of Economic Dynamics 9 (2006) 4, pp. 640-658

This paper analyzes the welfare costs of business cycles when workers face uninsurable idiosyncratic labor income risk … the welfare cost of business cycles when preferences and the (marginal) process of individual labor income in the economy … with business cycles are given. The general analysis shows that the introduction of multiple sources of idiosyncratic risk …

Persistent link: https://www.econbiz.de/10005069709

Why Do Some Households Save So Little? A Rational Explanation

Leung, Siu Fai - In: Review of Economic Dynamics 3 (2000) 4, pp. 771-800

wealth holdings are consistent with a rational life-cycle model of saving with uncertain lifetime and borrowing constraint …

Persistent link: https://www.econbiz.de/10005085617

Debt, Deficits, and Age-specific Mortality

Faruqee, Hamid - In: Review of Economic Dynamics 6 (2003) 2, pp. 300-312

This paper develops an overlapping agents model with age-specific mortality rates. The analytical framework also nests Blanchard's (1985, Journal of Political Economy 82, 1095â€“1117) "perpetual youth" model as a special, though perhaps not realistic, case. With age specific mortality...

Persistent link: https://www.econbiz.de/10005069678

Why Will Technical Change Not Be Permanently Skill-Biased?

Crifo-Tillet, Patricia; Lehmann, Etienne - In: Review of Economic Dynamics 7 (2004) 1, pp. 157-180

&D resources tend to be directed alternately towards skill-intensive and unskilled-intensive goods, creating cycles in skill premia …

Persistent link: https://www.econbiz.de/10005027325