-movements. Although there exist some discrepancies between the theory and data in the degree of correlation, the direction of change …

a shock reduces the long-run investment, GDP, wage income, and aggregate income of heterogeneous entrepreneurs in both … countries. We also numerically investigate the transitory responses to a temporal credit shock and show that such an …

a shock reduces the long-run investment, GDP, wage income, and aggregate income of heterogeneous entrepreneurs in both … countries. We also numerically investigate the transitory responses to a temporal credit shock and show that such an …

, by which a shock can affect both the intensive and extensive margins of trade. I also embed the mechanism of endogenous … growth into the model to indicate the potential for prolonged recessions, even for a transitory shock. I obtain the following … four main findings. First, an adverse financial shock in one country induces a global recession, even in the absence of …