Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
965990 | Journal of Macroeconomics | 2011 | 9 Pages |
Abstract
This paper illustrates how occasionally binding credit constraints can be quantitatively important to delivering business-cycle asymmetries. An empirical exercise suggests that countries display some business-cycles asymmetries, and an open-economy real business-cycle model is assessed where an international borrowing constraint binds occasionally. In the model, downward movements with a slack constraint are sharper and quicker than upward movements with a binding constraint, and this can deliver asymmetry over the business cycle. The model is calibrated to Canadian data and suggests that a necessary ingredient for asymmetry is a high initial level of foreign debt.
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Social Sciences and Humanities
Economics, Econometrics and Finance
Economics and Econometrics
Authors
Shuyun May Li, Scott Dressler,