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I add a moral hazard problem between banks and depositors as in Gertler and Karadi (2009) to a DSGE model with a costly state verification problem between entrepreneurs and banks as in Bernanke et al. (1999) (BGG). This modification amplifies the response of the external finance premium and the...
Persistent link: https://www.econbiz.de/10009664958
I add a moral hazard problem between banks and depositors as in Gertler and Karadi (2009) to a DSGE model with a costly state verification problem between entrepreneurs and banks as in Bernanke et al. (1999) (BGG). This modification amplifies the response of the external finance premium and the...
Persistent link: https://www.econbiz.de/10013099227
simulation of a bank balance sheet shock produces a downturn of a magnitude similar to the "Great Recession" …
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causes adverse selection in credit markets. The models feature a new shock, referred as a lemons shock, which changes the … counter-cyclical markup in wages and a variable capital utilization rate, a lemons shock drives business cycles. A lemons … shock turns out to be equivalent to a financial shock in one model and nearly equivalent to a shock to the marginal …
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simulation of a bank balance sheet shock produces a downturn of a magnitude similar to the "Great Recession". …
Persistent link: https://www.econbiz.de/10011596217