Abstract
This paper presents a general-equilibrium dynamic Ramsey-type model that can generate endogenous cycle. We assume two different representative agents, borrowers and lenders, and financial intermediaries with inside and outside money. We investigate under which conditions this model presents a cyclical relationship between capital and loans. The sources of endogenous fluctuations in this model come from a credit restriction in the representative-borrower problem.
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Faria, J.R., de Andrade, J.P. Investment, credit, and endogenous cycles. Zeitschr. f. Nationalökonomie 67, 135–143 (1998). https://doi.org/10.1007/BF01236066
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DOI: https://doi.org/10.1007/BF01236066