Credit Market Imperfections and Macroeconomic Instability. (December 2014)

• Record Type: Journal Article
• Authors: Kunieda, Takuma; Shibata, Akihisa
• Is Part Of: Pacific economic review. Volume 19:Number 5(2014:Dec.)
• Page Start: 592
• Page End: 611
• Publication Date: 2014-12
• Subjects: Pacific Area -- Economic conditions -- Periodicals; 330
• DOI: 10.1111/1468-0106.12085
• Languages: English
• ISSNs: 1361-374X

Abstract

<abstract abstract-type="main"> <title>Abstract</title> <p>Credit market imperfections typically characterize a low quality financial market, where the quality of information about borrowers is low and/or enforcement rules or institutions are not well developed. We consider an economy with credit market imperfections and analyse how changes in the degree of credit constraints affect economic fluctuations. The analysis demonstrates that if the degree of credit market imperfection is either severe or too soft, the economy converges to an asymptotically stable steady state, whereas if the degree of imperfection is moderate, the equilibrium involves deterministic cycles or chaos.</p> </abstract>