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This paper develops a theory of the credit cycle to account for recent evidence that capital is increasingly allocated to inefficiently risky projects over the course of the boom. The model features lenders who sell risk exposure to non-lender investors in order to relax borrowing constraints,...
Persistent link: https://www.econbiz.de/10011636206
This paper studies the relationship between the business cycle and financial intermediation in the euro area. We establish stylized facts and study their stability during the global financial crisis and the European sovereign debt crisis. Long-term interest rates have been exceptionally high and...
Persistent link: https://www.econbiz.de/10011959310
We develop a new theory of information production during credit booms. In our model, entrepreneurs need credit to undertake investment projects, some of which enable them to divert resources towards private consumption. Lenders can protect themselves from such diversion in two ways:...
Persistent link: https://www.econbiz.de/10011997468
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We propose a theoretical framework to reconcile episodes of V-shaped and L-shaped recovery, en- compassing the … may counterbal- ance the shocks, preventing the destruction of economic capacity and inducing a V-shaped recovery. However …-shaped recovery. When calibrated to the U.S. economy, the model replicates well the L-shaped recovery and switching-track that …
Persistent link: https://www.econbiz.de/10012627907
during a crisis are important for post-crisis output recovery. …
Persistent link: https://www.econbiz.de/10012206258
Using firm-level data from a large-scale European survey among 20 countries, we analyse the determinants of firms using short-time work (STW). We show that firms are more likely to use STW in case of negative demand shocks. We show that STW schemes are more likely to be used by firms with high...
Persistent link: https://www.econbiz.de/10011959218
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