Good news is bad news: Leverage cycles and sudden stops

Arbeitspapier

We show that a model with imperfectly forecastable changes in future productivity and an occasionally binding collateral constraint can match a set of stylized facts about "sudden stop" events. "Good" news about future productivity raises leverage during times of expansion, increasing the probability that the constraint binds, and a sudden stop occurs, in future periods. The economy exhibits a boom period in the run-up to the sudden stop, with output, consumption, and investment all above trend, consistent with the data. During the sudden stop, the nonlinear effects of the constraint induce output, consumption, and investment to fall substantially below trend, as they do in the data.

Angaben zum Objekt

• Sprache: Englisch

Verweise und Beziehungen

• Erschienen in: Series: Staff Report ; No. 738

Klassifikation und Themen

• Klassifikation: Wirtschaft ; Business Fluctuations; Cycles ; Open Economy Macroeconomics ; International Business Cycles ; International Financial Markets
• Thema: news shocks ; sudden stops ; leverage ; boom-bust cycle

Beteiligte, Orts- und Zeitangaben

• Ereignis: Geistige Schöpfung
• (wer): Akinci, Ozge ; Chahrour, Ryan
• Ereignis: Veröffentlichung
• (wer): Federal Reserve Bank of New York
• (wo): New York, NY
• (wann): 2015

Weitere Informationen

• Handle: http://hdl.handle.net/10419/130638
• Letzte Aktualisierung: 10.03.2025, 11:42 MEZ