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Credit constraints that link a private agent’s debt to market-determined prices embody a credit externality that drives … shocks trigger the credit constraint. We quantify the effects of this inefficiency in a two-sector dynamic stochastic general … equilibrium model of a small open economy calibrated to emerging markets. The credit externality increases the probability of …
Persistent link: https://www.econbiz.de/10010292300
credit restrictions not only amplify the results for the variability of labor share but also help better explain some of the …
Persistent link: https://www.econbiz.de/10010500184
Substantial attention has been paid in recent years to the risk of maturity mismatch in emerging markets. Although this risk is microeconomic in nature, the evidence advanced thus far has taken the form of macro correlations. This paper empirically evaluates this mechanism at the micro level by...
Persistent link: https://www.econbiz.de/10010327059
I provide a framework for understanding debt deleveraging in a group of _nancially integrated countries. During an episode of international deleveraging world consumption demand is depressed and the world interest rate is low, reecting a high propensity to save. If exchange rates are allowed to...
Persistent link: https://www.econbiz.de/10013370099
This paper proposes a quantitative theory of the interaction between private and public debt in an open economy. Excessive private debt increases the frequency of financial crises. During such crises the government provides fiscal bailouts financed with risky public debt. This response may cause...
Persistent link: https://www.econbiz.de/10013364539
heterogeneity in credit access and usage to study the credit-market, macroeconomic, and business cycle implications of the recent … for fintech intermediaries or lower barriers to fintech credit for unbanked firms. Second, greater fintech entry can have … greater relative volatility in bank credit and consumption. The effects of fintech entry on macro outcomes and volatility …
Persistent link: https://www.econbiz.de/10014278481
Protests and fiscal crises often coincide, with complex causal dynamics at play. We examine the interaction between tax revolts and sovereign risk using a quantitative structural model calibrated to Argentina during the Macri administration (2015-2019). In the model, the government can be...
Persistent link: https://www.econbiz.de/10014581889
This study shows that the presence of imperfect competition in the banking system propagates external shocks and amplifies the business cycle. Strategic limit pricing, aimed at protecting retail niches from potential competitors, generates countercyclical bank markups. Markup increments during...
Persistent link: https://www.econbiz.de/10010292237
This paper bridges the new open economy factor augmented VAR (FAVAR) studies with the recent findings in the business cycle synchronization literature emphasizing the importance of regional factors. That is, we estimate and identify a three block FAVAR model with separate world, regional and...
Persistent link: https://www.econbiz.de/10012143781
Existing DSGE models are not able to reproduce the observed influence of international business cycles on small open economies. We construct a two-sector New Keynesian model to address this puzzle. The set-up takes into account intermediate trade and producer heterogeneity, where goods and...
Persistent link: https://www.econbiz.de/10012143842