FISCAL POLICY AND LENDING RELATIONSHIPS
type="main" xml:lang="en"> <p>This paper studies how fiscal policy affects loan market conditions in the United States. First, it conducts a structural vector-autoregression analysis showing that the bank spread responds negatively to an expansionary government spending shock, while lending increases. Second, it illustrates that these results are mimicked by a dynamic stochastic general equilibrium model where the bank spread is endogenized via the inclusion of a banking sector exploiting lending relationships. Third, it shows that lending relationships represent a friction that generates a financial accelerator effect in the transmission of the fiscal shock. (JEL E44, E62)
Year of publication: |
2014
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Authors: | MELINA, GIOVANNI ; VILLA, STEFANIA |
Published in: |
Economic Inquiry. - Western Economic Association International - WEAI, ISSN 0095-2583. - Vol. 52.2014, 2, p. 696-712
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Publisher: |
Western Economic Association International - WEAI |
Saved in:
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