The New Palgrave Dictionary of Economics

2018 Edition
| Editors: Macmillan Publishers Ltd

Financial Accelerator

  • Oliver de Groot
Reference work entry
DOI: https://doi.org/10.1057/978-1-349-95189-5_3030

Abstract

The financial accelerator refers to the mechanism by which distortions (frictions) in financial markets amplify the propagation of shocks through an economy. This article sets out the theoretical foundations of the financial accelerator in financial friction DSGE (Dynamic Stochastic General Equilibrium) models and discusses the ability of these models to provide policy recommendations and a narrative for the 2007–08 financial crisis.

Keywords

Business Cycles Calibration Dynamic Macroeconomics Dynamic Stochastic General Equilibrium (DSGE) Models Estimation Expectations Identification Intertemporal Optimisation Problems Monetary Policy Shocks Technology Shocks Linear Models 

JEL Classifications

G63 E32 E44 E52 G11 
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Copyright information

© Macmillan Publishers Ltd. 2018

Authors and Affiliations

  • Oliver de Groot
    • 1
  1. 1.