Article: article from journal or magazin.
Do Capital Market Imperfections Exacerbate Output Fluctuations?
European Economic Review
We develop a dynamic general equilibrium macroeconomic model where a proportion of firms are credit constrained due to asymmetric information. In general, a macroeconomic shock has additional effects created by a reallocation of funds between credit-constrained and unconstrained firms. We show, however, that the output response to shocks is not necessarily amplified and can be dampened by the presence of asymmetric information.
Credit market imperfection, Agency costs, Business cycles
Web of science
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