This paper proposes a conceptualization of business cycle fluctuations in which the role of financial conditions and nonlinear dynamics are explicitly incorporated. We highlight the role of investment demand in driving economic fluctuations, consider its endogenous dynamic interactions with...

This paper proposes a conceptualization of business cycle fluctuations in which the role of financial conditions and nonlinear dynamics are explicitly incorporated. We highlight the role of investment demand in driving economic fluctuations, consider its endogenous dynamic interactions with...

We consider a financially constrained multinational corporation with investment projects in both an industrial and a developing country. Since the collateral values of the projects' tangible assets diverge, the willingness of banks to grant a loan depends not only on the firm's financial wealth...