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Questions tagged [credit-friction]

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Checking whether Ricardian equivalence holds

If I need to check whether Ricardian equivalence holds in a given economy, I only need to look at whether the equality $G + \frac{G}{1 + r} = Nt + \frac{Nt}{1 + r}$ holds, right? (I'm using $G$ to ...
Riccardo Iorio's user avatar
3 votes
1 answer
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Banerjee and Duflo - Do Firms Want to Borrow More? - Theoretical model

I am reading Banerjee and Duflo's (2014) seminal paper on credit constraints faced by firms in India. In their theoretical model (see page 11, namely figure 1), they show that, if firms are credit not ...
Ploit88's user avatar
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3 votes
1 answer
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Capital in a credit frictions model

I won't go into detail of this model because it's really just one point that i'm confused about. This question is based on a model by Matsuyama (2007). Agents are deciding whether to invest in a ...
Natasha's user avatar
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8 votes
1 answer
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Credit Frictions as the source of Business Cycles

Many papers look at the impact of credit frictions onto business cycles, and they almost unambiguously find that credit frictions work as an amplification mechanism of other shocks. For example, ...
FooBar's user avatar
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