Real business cycles, investment finance, and multiple equilibria
A simple neo-classical real business cycle model is presented. The model can produce multiple equilibria as a result of the interaction between the production and investment processes. Changes in the supply of funds and in capital stock yield persistence. Results demonstrate that the problem of costly state verification makes it easier to generate multiple equilibria. Findings also suggest the potential relevance of other sources of heterogeneity or non-linearity.
Publication Name: Journal of Economic Theory
The performance of credit markets under asymmetric information about project means and variances
A partial equilibrium model of the credit market that considers ex ante asymmetry of information about project means and variances is developed. The possibility of credit rationing in equilibrium as espoused in the adverse selection arguments of Stiglitz and Weiss and the favorable selection arguments of de Meza and Webb are accommodated in the model. Inefficiencies in aggregate investment are shown to involve not only quantity but also quality.
Publication Name: Journal of Economic Studies
Credit, money and the government budget constraint
A study has developed a model for the consideration of credit in economic analysis incorporating considerations of wealth effects and government budget constraint. The study facilitates the examination of credit market shock neglected by standard macroeconomic models and enhances the examination of typical policies. The model extends the work of B.S Bernanke and A.S. Blinder.
Publication Name: Bulletin of Economic Research
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