Arbeitspapier

Quantity rationing of credit

Quantity rationing of credit, when firms are denied loans, has greater potential to explain macroeconomics fluctuations than borrowing costs. This paper develops a DSGE model with both types of financial frictions. A deterioration in credit market confidence leads to a temporary change in the interest rate, but a persistent change in the fraction of firms receiving financing, which leads to a persistent fall in real activity. Empirical evidence confirms that credit market confidence, measured by the survey of loan officers, is a significant leading indicator for capacity utilization and output, while borrowing costs, measured by interest rate spreads, is not.

Language
Englisch
ISBN
978-952-462-786-3

Bibliographic citation
Series: Bank of Finland Research Discussion Papers ; No. 3/2012

Classification
Wirtschaft
General Aggregative Models: General
Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
Financial Markets and the Macroeconomy
Monetary Policy, Central Banking, and the Supply of Money and Credit: General
Subject
quantity rationing
credit
VAR

Event
Geistige Schöpfung
(who)
Waters, George A.
Event
Veröffentlichung
(who)
Bank of Finland
(where)
Helsinki
(when)
2012

Handle
Last update
20.09.2024, 8:22 AM CEST

Data provider

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Object type

  • Arbeitspapier

Associated

  • Waters, George A.
  • Bank of Finland

Time of origin

  • 2012

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