-linearities in the credit channel. …

mechanism of Canadian monetary policy, and to evaluate the real effects of exogenous credit shocks. Financial frictions, which … credit shocks. A general finding is that almost all of the real response to a monetary policy shock comes from the price … rigidity and not the credit frictions. Credit shocks, however, do have substantial real effects on macroeconomic variables …

-sector small open economy model wherein heterogeneous firms face collateralized credit constraints for investment loans. The model …. In response to a sudden tightening of credit availability, the model generates a large decline in external debt, an … endogenous fall in measured TFP. Furthermore, the subsequent recovery is driven by the traded sector, since the credit crunch is …