search query: @indexterm BUSINESS CYCLES / total: 529
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| Author: | Suarez, J. Sussman, O. |
| Title: | Endogenous cycles in a Stiglitz-Weiss economy |
| Journal: | Journal of Economic Theory
1997 : SEP, VOL. 76:1, p. 47-71 |
| Index terms: | BUSINESS CYCLES FINANCE MORAL HAZARD |
| Language: | eng |
| Abstract: | This study models a pure reversion mechanism, such that the economy may converge to two-period equilibrium cycle. The mechanism confirms that financal imperfections could have a dramatic amplification effect. Contracts are complete, unlike in some related models, and indexation is not assumed away. The welfare properties of a possible stabilizing policy are analysed. The model is a dynamic version of the Stiglitz-Weiss model of lending under moral hazard, and it still captures some significant features of credit cycles. |
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