Economic crisis and the financial system amplification effect

A well informed and cautious financial system can improves the welfare outcome of an economy by driving lenders surplus to borrow-ers. Nevertheless in a crisis situation the financial system cautious behavior can become a crisis amplifier given that the credit approval conditions are hardly meet, so...

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Detalles Bibliográficos
Autor Principal: Arango Isaza, Mauricio
Otros Autores: Posada Posada, Carlos Esteban
Formato: Tesis de maestría (Master Thesis)
Lenguaje:Español (Spanish)
Publicado: Universidad del Rosario 2012
Materias:
Acceso en línea:http://repository.urosario.edu.co/handle/10336/4141
Descripción
Sumario:A well informed and cautious financial system can improves the welfare outcome of an economy by driving lenders surplus to borrow-ers. Nevertheless in a crisis situation the financial system cautious behavior can become a crisis amplifier given that the credit approval conditions are hardly meet, so there could be a credit crunch even in a low interest rates environment. This paper illustrates the previous by developing a general equilibrium model where the collateral credit condition defines the prudential behavior of the financial sys-tem. This and some other conditions amplify the magnitude of a negative productivity shock.