Anmerkungen:
Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments December 2006 erstellt
Beschreibung:
Theory suggests that endogenous borrowing constraints amplify the impact of external shocks on the economy. How big is the amplification? In this paper, we quantitatively investigate this question in the context of a dynamic, general equilibrium model with borrowing constraints under two alternatives: (1) borrowing constraint endogenously depends on the borrower's net worth (2) borrowing constraint is exogenous. Calibrating our model to the Japanese economy, we find evidence of significant amplification. Feeding in the time series of productivity measured as a Solow residual, we find that the TFP fluctuations can well account for the boom and bust of the Japanese economy during 1980 to 2004 and the impact is much more significant when borrowing constraint is endogenously determined