This paper argues that self-fulfilling beliefs in credit conditions can generate endogenously persistent business cycle … shocks. Capital from less productive firms is lent to more productive ones in the form of credit secured by collateral and … also as unsecured credit based on reputation. A dynamic complementarity between current and future credit constraints …

In U.S. data 1981–2012, unsecured firm credit moves procyclically and tends to lead GDP, while secured firm credit is … acyclical; similarly, shocks to unsecured firm credit explain a far larger fraction of output fluctuations than shocks to … secured credit. In this paper we develop a tractable dynamic general equilibrium model in which unsecured firm credit arises …

loan portfolios, allow for interbank trading and show how a credit bubble can develop from a financial innovation. We then …

In U.S. data 1981–2012, unsecured firm credit moves procyclically and tends to lead GDP, while secured firm credit is … acyclical; similarly, shocks to unsecured firm credit explain a far larger fraction of output fluctuations than shocks to … secured credit. In this paper we develop a tractable dynamic general equilibrium model in which unsecured firm credit arises …