Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
5059894 | Economics Letters | 2012 | 5 Pages |
Abstract
Comparing Bernanke et al.'s (1999) financial accelerator model to a comparable model without an operational financial accelerator mechanism, we find that financial acceleration is reduced when monetary policy reacts to the output gap and when firm-specific volatility rises.
⺠We examine the external finance premium model when output is included in the monetary policy rule. ⺠Financial acceleration is lower if the central bank responds to output. ⺠In recessions, when firm-specific volatility rises, financial acceleration is further reduced.
Related Topics
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Authors
GüneÅ Kamber, Christoph Thoenissen,