Financial Frictions in Macroeconomic Fluctuations

46 Pages Posted: 19 Dec 2012

See all articles by Vincenzo Quadrini

Vincenzo Quadrini

University of Southern California - Marshall School of Business - Finance and Business Economics Department; National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR)

Date Written: September 1, 2011

Abstract

The key ideas for adding financial market frictions in general equilibrium models are not new in macroeconomics. However, it is only with the recent crisis that the profession has fully recognized the importance of financial markets for business cycle fluctuations. In this article I review some of the most popular ideas proposed in the literature and I show how the modeling of financial frictions helps us understand several dynamic features of the macroeconomy.

Suggested Citation

Quadrini, Vincenzo, Financial Frictions in Macroeconomic Fluctuations (September 1, 2011). FRB Richmond Economic Quarterly, vol. 97, no. 3, Third Quarter 2011, pp. 209-254, Available at SSRN: https://ssrn.com/abstract=2190595

Vincenzo Quadrini (Contact Author)

University of Southern California - Marshall School of Business - Finance and Business Economics Department ( email )

Marshall School of Business
Los Angeles, CA 90089
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Centre for Economic Policy Research (CEPR)

London
United Kingdom

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