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dc.contributor.author
Gersbach, Hans
dc.contributor.author
Rochet, Jean-Charles
dc.contributor.author
Scheffel, Martin
dc.date.accessioned
2017-06-11T22:08:04Z
dc.date.available
2017-06-11T22:08:04Z
dc.date.issued
2015
dc.identifier.issn
0265-8003
dc.identifier.uri
http://hdl.handle.net/20.500.11850/108808
dc.description.abstract
We develop a simple integration of banks into the Solow model. The objective is to provide a tractable benchmark for analyzing the long-term impact of crises on economic activities and growth. A fraction of firms have to rely on banks for financing their investments, while banks themselves face an endogenous leverage constraint. Informed lending by banks and uninformed lending through capital markets spur capital accumulation. The ensuing coupled accumulation rules for household wealth and bank equity yield a uniquely determined steady state. We highlight three properties when shocks to wealth, productivity or trust affect the economy. First, typically, bond and loan financing react in opposite directions to such shocks. Second, negative temporary shocks to household wealth (financial crisis) or negative sectoral production shocks can, surprisingly, cause persistent booms of banking and even of the entire economy – after an initial bust. Third, shocks to bank equity (banking crisis), however, lead to large and persistent downturns associated with high output losses.
dc.language.iso
en
dc.publisher
CEPR
dc.subject
Economic activity and growth
dc.subject
Financial intermediation
dc.subject
Impact of banking and financial crises
dc.subject
Solow model
dc.title
Taking Banks to Solow
dc.type
Working Paper
ethz.journal.title
CEPR Discussion Papers
ethz.journal.volume
DP10439
ethz.notes
.
ethz.identifier.nebis
010410833
ethz.publication.place
London
ethz.publication.status
published
ethz.leitzahl
ETH Zürich::00002 - ETH Zürich::00012 - Lehre und Forschung::00007 - Departemente::02120 - Dep. Management, Technologie und Ökon. / Dep. of Management, Technology, and Ec.::03729 - Gersbach, Hans / Gersbach, Hans
ethz.leitzahl.certified
ETH Zürich::00002 - ETH Zürich::00012 - Lehre und Forschung::00007 - Departemente::02120 - Dep. Management, Technologie und Ökon. / Dep. of Management, Technology, and Ec.::03729 - Gersbach, Hans / Gersbach, Hans
ethz.date.deposited
2017-06-11T22:08:08Z
ethz.source
ECIT
ethz.identifier.importid
imp593653d600f6f26592
ethz.ecitpid
pub:169824
ethz.eth
yes
ethz.availability
Metadata only
ethz.rosetta.installDate
2017-07-14T18:30:33Z
ethz.rosetta.lastUpdated
2018-11-02T21:09:35Z
ethz.rosetta.exportRequired
true
ethz.rosetta.versionExported
true
ethz.COinS
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