کد مقاله | کد نشریه | سال انتشار | مقاله انگلیسی | نسخه تمام متن |
---|---|---|---|---|
5058322 | 1476623 | 2016 | 5 صفحه PDF | دانلود رایگان |
![عکس صفحه اول مقاله: Endogenous market structures in the credit market and Ricardian equivalence Endogenous market structures in the credit market and Ricardian equivalence](/preview/png/5058322.png)
- We analyze endogenous market structures in banking in a dynamic model.
- Ricardian equivalence breaks up with imperfect competition in the credit market.
- Deficits reduce consumption and increase spreads between deposit and lending rates.
We analyze the impact of imperfect competition in banking on fiscal policy in a dynamic model. In an exchange two-period economy the impact of deficit spending is to reduce private consumption and increase the spread between deposit and lending rates. The reason is that a tax cut forces consumers to save more and makes their supply of savings more rigid, which softens competition between banks leading to lower rates on deposits and a more than proportional increase in savings. In a closed production economy this reduces the equilibrium interest rate on borrowers, which promotes private investment.
Journal: Economics Letters - Volume 140, March 2016, Pages 14-18