Arbeitspapier
Confidence and the financial accelerator
We introduce financial frictions in the spirit of Bernanke, Gertler, and Gilchrist (1999) into a standard RBC model and use the heterogeneous-prior framework of Angeletos, Collard, and Dellas (2018) to accommodate confidence-driven business cycle fluctuations. We show that financial frictions strongly amplify the response to confidence shocks - more strongly than the response to fundamental shocks. Furthermore, we show that in the presence of financial frictions, prolonged episodes of unfounded optimism cause boom-bust cycles in investment and to a lesser extent in output. In particular, the financial state of the economy deteriorates severely after the initial boom, which leaves the economy more vulnerable to adverse shocks.
- Sprache
-
Englisch
- Erschienen in
-
Series: Discussion Papers ; No. 18-23
- Klassifikation
-
Wirtschaft
Business Fluctuations; Cycles
Financial Markets and the Macroeconomy
- Thema
-
Confidence
sentiments
financial accelerator
financial frictions
higher-order beliefs
higher-order uncertainty
business cycle
- Ereignis
-
Geistige Schöpfung
- (wer)
-
Myohl, Christian
Stucki, Yannic
- Ereignis
-
Veröffentlichung
- (wer)
-
University of Bern, Department of Economics
- (wo)
-
Bern
- (wann)
-
2018
- Handle
- Letzte Aktualisierung
-
10.03.2025, 11:41 MEZ
Datenpartner
Dieses Objekt wird bereitgestellt von:
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. Bei Fragen zum Objekt wenden Sie sich bitte an den Datenpartner.
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. Bei Fragen zum Objekt wenden Sie sich bitte an den Datenpartner.
Objekttyp
- Arbeitspapier
Beteiligte
- Myohl, Christian
- Stucki, Yannic
- University of Bern, Department of Economics
Entstanden
- 2018
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