On the amplification role of collateral constraints

This letter explores the role of costly liquidation of the collateralized asset in a stochastic version of the Kiyotaki and Moore (1997) model. We document that the degree of inefficiency in the debt enforcement procedure plays a key role in the endogenous amplification of productivity shocks generated by collateral constraints.

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Year of publication:	2012
Authors:	Mendicino, Caterina
Published in:	Economics Letters. - Elsevier, ISSN 0165-1765. - Vol. 117.2012, 2, p. 429-435
Publisher:	Elsevier
Subject:	Business cycle \| Debt enforcement procedures \| Endogenous borrowing limits

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Type of publication:	Article
Classification:	E - Macroeconomics and Monetary Economics
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10011041850