Motivated by the apparent failure of the credit multiplier mechanism (CM) to deliver amplification in DSGE models, we re-examine its role in business cycles to address the question: is something wrong with the CM? Our answer is no. In coming to this answer we construct a model with reproducible...

In this paper, I propose a general equilibrium model featuring heterogeneous firms and a government that is both unable to commit and relatively more impatient than firms. I find that, as predicted by theoretical papers on limited commitment, the threat of expropriation alone is enough to...

A large theoretical literature suggests that financial frictions provide a mechanism which amplifies and propagates macroeconomic shocks. However, quantitative papers that embed this mechanism, referred to as the credit multiplier, into standard DSGE models conclude that although credit...

important interaction between entry and investment, as the two can be used for consumption smoothing. Entry dampens the volatility of investment and helps the model to have a better fit for the second moments of all aggregate variables. Regarding prices, the model delivers a negative correlation...

Are firm entry and fixed exporting costs relevant for understanding the international transmission of business cycles? We revisit this question using a model that includes entry, selection to exporting activity, physical capital accumulation and endogenous labor supply. We determine that once...