University of Minnesota Ph.D. dissertation. December 2009. Major: Economics. Advisor: Fabrizio Perri. 1 computer file (PDF); v, 114 pages, appendices A-C.

Periods of economic boom with rapid credit and GDP growth can be followed by sudden busts. In the presence of financial markets imperfections, a simple modification of a neoclassical growth model can fully account for this behavior. I study a growth model for a small open economy where...