Published in:Sveriges Riksbank Working Paper Series ; No. 229
Extent:
1 Online-Ressource (37 p)
Language:
English
DOI:
10.2139/ssrn.1483017
Identifier:
Origination:
Footnote:
Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments April 2009 erstellt
Description:
We explore the implications of shocks to expected future productivity. In a setting with limited enforcement of financial contracts, firms have to post collateral to obtain external finance. In a real one-sector model with this type of "collateral constraint", positive news about future productivity implies an increase in stock prices, as well as the other properties of an expectation-driven business cycle. Furthermore, these properties are obtained with standard consumption preferences and capital adjustment costs