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We argue that financial frictions and financial shocks can be an important factor behind the slow recoveries from the three most recent recessions. To illustrate this point, we augment a simple RBC model with a collateral constraint whose tightness is randomly disturbed by a shock that...
Persistent link: https://www.econbiz.de/10011261642
We present an RBC model with a collateral constraint whose tightness is randomly disturbed by a financial shock and evidence that such shock has become more persistent since 1980s. We show that this can be an important contributor to the recent slow recoveries, and a key mechanism may have to do...
Persistent link: https://www.econbiz.de/10011252562
We argue that financial frictions and financial shocks can be an important factor behind the slow recoveries from the three most recent recessions. To illustrate this point, we augment a simple RBC model with a collateral constraint whose tightness is randomly disturbed by a shock that...
Persistent link: https://www.econbiz.de/10010934867