Year: 2000
Author: Arnold, Lutz
Credit and Capital Markets – Kredit und Kapital, Vol. 33 (2000), Iss. 4 : pp. 521–547
Abstract
Credit Rationing, Unemployment and Business Fluctuations
Greenwald and Stiglitz propose viewing business cycles as caused by the interplay of imperfections in the markets for capital and labor: shocks to firms’ equity affect labor demand since equity is a hedge against bankruptcy and firms are bankruptcy-averse; because of labor market imperfections, fluctuations in labor demand translate into fluctuations in unemployment and production. In the present paper the assumption that firms are bankruptcy-averse is replaced with the more appealing assumption that banks are bankruptcy-averse and ration credit to firms. It turns out that, in the specific framework considered with aggregate disturbances only, the two alternative assumptions are equivalent: equilibrium quantities and prices are the same under either specification. (An English version of this paper is available from the author upon request.)
Journal Article Details
Publisher Name: Global Science Press
Language: Multiple languages
DOI: https://doi.org/10.3790/ccm.33.4.521
Credit and Capital Markets – Kredit und Kapital, Vol. 33 (2000), Iss. 4 : pp. 521–547
Published online: 2000-04
AMS Subject Headings: Duncker & Humblot
Copyright: COPYRIGHT: © Global Science Press
Pages: 27
Author Details
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