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Credit Supply and Output Volatility

Cantore, C and Satchi, M Credit Supply and Output Volatility .

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The link between aggregate profits and investment has been widely analysed through the impact of profits on net worth and therefore the firm’s ability to borrow, in the presence of credit market imperfections. How the business cycle is affected if profits also affect investment through an impact on savings and therefore the intermediary’s ability to lend, is the topic of this paper. We find that the fluctuations in the supply of credit that result from this may significantly amplify output responses to shocks in comparison to a situation where the net worth mechanism operates alone.

Item Type: Other
Divisions : Surrey research (other units)
Authors :
Satchi, M
Uncontrolled Keywords : E32, E44, E51, Business Cycles, Credit Market Imperfections, Loan Supply
Depositing User : Symplectic Elements
Date Deposited : 16 May 2017 15:14
Last Modified : 23 Jan 2020 10:28

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