Macroeconomic implications of financial imperfections: A survey

Arbeitspapier

This paper surveys the theoretical and empirical literature on the macroeconomic implications of financial imperfections. It focuses on two major channels through which financial imperfections can affect macroeconomic outcomes. The first channel, which operates through the demand side of finance and is captured by financial accelerator-type mechanisms, describes how changes in borrowers' balance sheets can affect their access to finance and thereby amplify and propagate economic and financial shocks. The second channel, which is associated with the supply side of finance, emphasises the implications of changes in financial intermediaries' balance sheets for the supply of credit, liquidity and asset prices, and, consequently, for macroeconomic outcomes. These channels have been shown to be important in explaining the linkages between the real economy and the financial sector. That said, many questions remain.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Working Paper ; No. 1719

Classification and Topics

• Classification: Wirtschaft ; General Equilibrium and Disequilibrium: Financial Markets ; Macroeconomics: Consumption; Saving; Wealth ; Business Fluctuations; Cycles ; Financial Markets and the Macroeconomy ; Money Supply; Credit; Money Multipliers ; Financial Aspects of Economic Integration ; International Business Cycles ; Economic Impacts of Globalization: Finance ; Financial Crises ; General Financial Markets: General (includes Measurement and Data) ; Asset Pricing; Trading Volume; Bond Interest Rates ; Information and Market Efficiency; Event Studies; Insider Trading ; International Financial Markets ; Banks; Depository Institutions; Micro Finance Institutions; Mortgages
• Subject: Asset prices ; balance sheets ; credit ; financial accelerator ; financial intermediation ; financial linkages ; international linkages ; leverage ; liquidity ; macro-financial linkages ; output ; real-financial linkages

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Claessens, Stijn ; Kose, M. Ayhan
• Event: Veröffentlichung
• (who): Koç University-TÜSİAD Economic Research Forum (ERF)
• (where): Istanbul
• (when): 2017

Further information

• Handle: http://hdl.handle.net/10419/202973
• Last update: 10.03.2025, 11:42 AM CET