Taxation, credit frictions and the cyclical behavior of the labor wedge

2020 ◽  
Author(s):  
Salem Abo-Zaid
Keyword(s):  
Labor Wedge ◽  
Cyclical Behavior ◽  
Credit Frictions

scholarly journals CREDIT FRICTIONS, COLLATERAL, AND THE CYCLICAL BEHAVIOR OF THE FINANCE PREMIUM

2013 ◽  
Vol 18 (5) ◽  
pp. 985-997 ◽  
Author(s):  
Pierre-Richard Agénor ◽  
George J. Bratsiotis ◽  
Damjan Pfajfar
Keyword(s):  
Dynamic Stochastic General Equilibrium ◽  
Monetary Shocks ◽  
Loan Rate ◽  
Loan Spread ◽  
Dynamic Stochastic ◽  
Cyclical Behavior ◽  
Credit Frictions ◽  
Production Output ◽  
The Cost ◽  
Macro Variables

This paper examines the behavior of the finance premium after technology and monetary shocks in a dynamic stochastic general equilibrium (DSGE) model where borrowers use a fraction of their production (output) as collateral. We show that this simple framework is capable of producing a countercyclical finance premium, while matching the well-documented stylized facts of macro dynamics. A key feature is the endogenous derivation of the default probability from break-even conditions, which results in the loan rate being set as a countercyclical finance premium over the cost of borrowing from the central bank. The latter is shown to provide an accelerator effect through which shocks can amplify the loan spread and the dynamic response of macro variables.

Uncertainty in a Model with Credit Frictions

2014 ◽  
Author(s):  
Ambrogio Cesa-Bianchi ◽  
Emilio Fernandez-Corugedo
Keyword(s):  
Credit Frictions

scholarly journals The Cyclical Behavior of the Price‐Cost Markup

2020 ◽  
Vol 52 (S2) ◽  
pp. 319-353 ◽  
Author(s):  
CHRISTOPHER J. NEKARDA ◽  
VALERIE A. RAMEY
Keyword(s):  
Cyclical Behavior

SHOCKS AND FRICTIONS IN THAI ECONOMY: THROUGH THE LENS OF BUSINESS CYCLE ACCOUNTING

2020 ◽  
pp. 1-15
Author(s):  
VIMUT VANITCHAREARNTHUM
Keyword(s):  
Business Cycle ◽  
Open Economy ◽  
Prime Factor ◽  
Aggregate Fluctuations ◽  
Aggregate Output ◽  
Business Cycle Accounting ◽  
Labor Wedge ◽  
Model Set ◽  
Set Up ◽  
Investment Fluctuation

This paper applies business cycle accounting methodology to analyze the sources of aggregate fluctuations in Thai economy, especially during the recent severe recessions in 1997–1998 and 2008–2009. This exploration helps researchers uncover possible shocks and frictions that drive business cycle in a small and open economy within a minimal model set-up. Under this methodology, a fluctuation in aggregate output can be accounted for by exogenous time-varying wedges, namely efficiency wedge, investment wedge, labor wedge, government wedge, etc. This study found that the efficiency wedge is essential in accounting for aggregate output, consumption and investment fluctuation, while the bond wedge, which only present in an open economy setting, is a prime factor in accounting for movement in current accounts. I conducted counterfactual experiments to see what accounts for the output drop during recent recessions. I find that the efficiency wedge played a key role in recent recessions in Thailand, while the investment wedge was accounted for slow economic recovery after the recessions.

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