The DOI matches its Crossref record; 1 of the 1 references it cites were found in a registry or an index.
Overborrowing and Systemic Externalities in the Business Cycle
Open accessAbstract
Credit constraints linking debt to market-determined prices embody a systemic credit externality that drives a wedge between competitive and constrained socially optimal equilibria, inducing private agents to overborrow. This externality arises because private agents fail to internalize the financial amplification effects of carrying a large amount of debt when credit constraints bind. We conduct a quantitative analysis of this externality in a two-sector dynamic stochastic general equilibrium (DSGE) model of a small open economy calibrated to emerging markets. Raising the cost of borrowing during tranquil times restores constrained efficiency and significantly reduces the incidence and severity of financial crises. JEL: E13, E32, E44, F41, G01
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Citations
Cites
Credit Rationing in Markets with Imperfect Information
Stiglitz, J. E., & Weiss, A. (1981) · Columbia University · doi:10.7916/d8v12ft1 · Cited by 12,769
Cited by
Goldberg, L. S., & Campa, J. M. (2010) · Review of Economics and Statistics · doi:10.1162/rest.2010.11459 · Cited by 339
Metadata
- Authors
- Bianchi, J.
- Venue
- American Economic Review
- Publisher
- American Economic Association
- Published
- 2011-12-01
- Volume
- 101
- Issue
- 7
- Pages
- 3400-3426
- ISSN
- 0002-8282 (ISSN-L)
- OpenAlex
- W1560823778
- Cited by
- 952
- References
- 1
- FWCI
- 113.92
- Type
- journal article
- Language
- en
- Open access
- green
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Contains information from the Semantic Scholar Academic Graph Datasets, made available under the ODC Attribution License (ODC-BY 1.0).
Semantic Scholar’s data is described in: Kinney, R., et al. (2023). The Semantic Scholar Open Data Platform. arXiv:2301.10140.
