Arbeitspapier
Financial development and the volatility of income
This paper presents a general equilibrium model with endogenous collateral constraints to study the relationship between financial development and business cycle fluctuations in a cross-section of economies with different sizes of their financial sector. The financial sector can amplify or dampen the volatility of income by increasing or reducing the business cycle effects of technological shocks. We find a non-monotonic relationship between the volatility of income and financial development measured by total borrowing and lending. A more developed financial system unambiguously increases the income level however the volatility can rise or fall depending on the degree of financial development.
- Language
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Englisch
- Bibliographic citation
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Series: Bank of Canada Working Paper ; No. 2013-4
- Classification
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Wirtschaft
Business Fluctuations; Cycles
Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook: General
- Subject
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Credit and credit aggregates
Financial stability
- Event
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Geistige Schöpfung
- (who)
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Pinheiro, Tiago
Rivadeneyra, Francisco
Teignier, Marc
- Event
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Veröffentlichung
- (who)
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Bank of Canada
- (where)
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Ottawa
- (when)
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2013
- DOI
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doi:10.34989/swp-2013-4
- Handle
- Last update
-
10.03.2025, 11:43 AM CET
Data provider
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Arbeitspapier
Associated
- Pinheiro, Tiago
- Rivadeneyra, Francisco
- Teignier, Marc
- Bank of Canada
Time of origin
- 2013
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