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On the amplification role of collateral constraints

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  • Mendicino, Caterina

Abstract

This letter explores the role of costly liquidation of the collateralized asset in a stochastic version of the Kiyotaki and Moore (1997) model. We document that the degree of inefficiency in the debt enforcement procedure plays a key role in the endogenous amplification of productivity shocks generated by collateral constraints.

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  • Mendicino, Caterina, 2012. "On the amplification role of collateral constraints," Economics Letters, Elsevier, vol. 117(2), pages 429-435.
    • Handle: RePEc:eee:ecolet:v:117:y:2012:i:2:p:429-435
    DOI: 10.1016/j.econlet.2012.06.007
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    Cited by:

    1. Catalina Granda Carvajal, 2015. "Informality and macroeconomic volatility: do credit constraints matter?," Journal of Economic Studies, Emerald Group Publishing Limited, vol. 42(6), pages 1095-1111, November.
    2. Neri, Stefano & Notarpietro, Alessandro, 2019. "Collateral constraints, the zero lower bound, and the debt–deflation mechanism," Economics Letters, Elsevier, vol. 174(C), pages 144-148.
    3. Mr. Jan Vlcek & Mr. Scott Roger, 2012. "Macrofinancial Modeling At Central Banks: Recent Developments and Future Directions," IMF Working Papers 2012/021, International Monetary Fund.

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    More about this item

    Keywords

    Business cycle; Debt enforcement procedures; Endogenous borrowing limits;
    All these keywords.

    JEL classification:

    • E - Macroeconomics and Monetary Economics
    • E - Macroeconomics and Monetary Economics
    • E - Macroeconomics and Monetary Economics

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