scholarly journals Uncertainty, Financial Frictions, and Nominal Rigidities: A Quantitative Investigation

2018 ◽  
Vol 50 (4) ◽  
pp. 603-636 ◽  
Author(s):  
AMBROGIO CESA-BIANCHI ◽  
EMILIO FERNANDEZ-CORUGEDO
Keyword(s):  
Financial Frictions ◽  
Nominal Rigidities ◽  
Quantitative Investigation

scholarly journals Uncertainty, Financial Frictions and Nominal Rigidities: A Quantitative Investigation

2017 ◽  
Vol 17 (211) ◽  
pp. 1
Author(s):  
Ambrogio Cesa-Bianchi ◽  
Emilio Fernández Corugedo ◽  
◽  
Keyword(s):  
Financial Frictions ◽  
Nominal Rigidities ◽  
Quantitative Investigation

ASYMMETRY AND THE AMPLITUDE OF BUSINESS CYCLE FLUCTUATIONS: A QUANTITATIVE INVESTIGATION OF THE ROLE OF FINANCIAL FRICTIONS

2016 ◽  
Vol 22 (2) ◽  
pp. 279-306 ◽  
Author(s):  
Manoj Atolia ◽  
John Gibson ◽  
Milton Marquis
Keyword(s):  
Business Cycles ◽  
Business Cycle ◽  
Financial Frictions ◽  
Quantitative Investigation ◽  
Macroeconomic Volatility ◽  
Access To Credit ◽  
Business Cycle Fluctuations ◽  
Key Features ◽  
The Business Cycle

We examine the quantitative significance of financial frictions that reduce firms' access to credit in explaining asymmetric business cycles characterized by disproportionately severe downturns. Using rate spread data to calibrate the severity of these frictions, we successfully match several key features of U.S. data. Specifically, although output and consumption are relatively symmetric (with output being slightly more asymmetric), investment and hours worked display significant asymmetry over the business cycle. We also demonstrate that our financial frictions are capable of significantly amplifying adverse shocks during severe downturns. Although the data suggest that these frictions are only active occasionally, our results indicate that they are still a significant source of macroeconomic volatility over the business cycle.

Leijonhufvud on New Keynesian Economics and the economics of Keynes

2020 ◽  
Vol 72 (4) ◽  
pp. 923-945 ◽  
Author(s):  
Hans-Michael Trautwein
Keyword(s):  
Financial Crises ◽  
Financial Frictions ◽  
New Keynesian ◽  
Nominal Rigidities ◽  
Continuity And Change ◽  
Keynesian Economics ◽  
Macroeconomic Instability ◽  
Made In

Abstract The theme that Axel Leijonhufvud has extracted from the economics of Keynes is the potential for failures in the intertemporal coordination of activities in complex market systems. In his path-breaking book of 1968, he attacked standard Keynesian Economics for its view on frictions, which reduces the causes of macroeconomic pathologies to nominal rigidities. With the rise of DSGE-based New Keynesian Economics, Leijonhufvud has pointed out that ‘standard macroeconomics’ is still stuck in the frictions view. Referring to recent financial crises, he considers DSGE modelling to be hopelessly inadequate for dealing with such macroeconomic instability. Yet, the financial frictions literature in New Keynesian Economics claims to have found ways to incorporate financial crises into DSGE frameworks. The article describes continuity and change in Leijonhufvud’s critique of Old and New Keynesians, and assesses contrary claims to progress made in the DSGE world.

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