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The behavioural agent-based framework of De Grauwe and Gerba (2015) is extended to allow for a counterfactual exercise on the role of banks for monetary transmissions. A bank-based corporate financing friction is introduced and the relative contribution of that friction to the effectiveness of...
Persistent link: https://www.econbiz.de/10011412383
asset side and equity capital as well as debt on the liabilities side. A number of findings emerge when simulating the model … higher levels of leverage lead to a greater inequality among agents. Furthermore, greater leverage increases the frequency of … bankruptcies and systemic events. Credit frictions, which we define as the stickiness of debt adjustments, are able to explain a …
Persistent link: https://www.econbiz.de/10010407454