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Monetary Policy with Heterogeneous Collateralized Borrowing

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  • José Suárez-Lledó

Abstract

This paper presents a model with money and credit with endogenous borrowing constraints and heterogeneous borrowing capacity. The analysis focuses on economies where collateralized credit plays an essential role. The model explores the effects of changes in the aggregate value of collateral on the number of agents that are borrowing constrained, real allocations, interest rates, and the liquidity premium of the asset that secures the loans. The results apply to a wide range of economies as long as inflation is not too low.

Suggested Citation

  • José Suárez-Lledó, "undated". "Monetary Policy with Heterogeneous Collateralized Borrowing," Working Papers 374, Barcelona School of Economics.
    • Handle: RePEc:bge:wpaper:374
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    References listed on IDEAS

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    1. Bernanke, Ben S. & Gertler, Mark & Gilchrist, Simon, 1999. "The financial accelerator in a quantitative business cycle framework," Handbook of Macroeconomics, in: J. B. Taylor & M. Woodford (ed.), Handbook of Macroeconomics, edition 1, volume 1, chapter 21, pages 1341-1393, Elsevier.
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    8. Tommaso Monacelli, 2008. "Optimal Monetary Policy with Collateralized Household Debt and Borrowing Constraints," NBER Chapters, in: Asset Prices and Monetary Policy, pages 103-146, National Bureau of Economic Research, Inc.
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    15. Athanasios Geromichalos & Juan M Licari & Jose Suarez-Lledo, 2007. "Monetary Policy and Asset Prices," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 10(4), pages 761-779, October.
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    Cited by:

    1. James Chapman & Jonathan Chiu & Miguel Molico, 2011. "Central bank haircut policy," Annals of Finance, Springer, vol. 7(3), pages 319-348, August.

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    More about this item

    Keywords

    collateral; liquidity; money; monetary policy; asset pricing;
    All these keywords.

    JEL classification:

    • E41 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Demand for Money

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