Journal Article

Firm volatility and credit: a macroeconomic analysis

Abstract: This paper examines a tractable real business cycle model with idiosyncratic productivity shocks and binding credit constraints on entrepreneurs. The model shows how firm volatility increases in combination with credit market development. It further generates the observed comovement of credit and firm volatility with output at business cycle frequencies in response to aggregate productivity shocks.

Keywords: Business cycles;

Bibliographic Information

Provider: Federal Reserve Bank of St. Louis

Part of Series: Review

Publication Date: 2009

Volume: 91

Issue: Mar

Pages: 95-106