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SUMMARY:A Macroeconomic Model with Financially Constrained Producers and I
 ntermediaries
DTSTART:20170519T103000
DTEND:20170519T120000
DTSTAMP:20260508T083520Z
UID:bcaaa6b256fb866cf4ef18e2f042422065c1fbc358b4169855313698
CATEGORIES:Conferences - Seminars
DESCRIPTION:Stijn VAN NIEUWERBURGH (NYU Stern)\nWe propose a model that ca
 n simultaneously capture the sharp and persistent drop in macro-economic a
 ggregates and the sharp change in credit spreads observed in the U.S. duri
 ng the Great Recession. We use the model to evaluate the quantitative effe
 cts of macro-prudential policy. The model features borrower-entrepreneurs 
 who produce output financed with long-term debt issued by financial interm
 ediaries and their own equity. Intermediaries fund these loans combining d
 eposits and their own equity. Savers provide funding to banks and to the g
 overnment. Both entrepreneurs and intermediaries make optimal default deci
 sions. The government issues debt to finance budget defficits and to pay f
 or bank bailouts. Intermediaries are subject to a regulatory capital const
 raint. Financial recessions\, triggered by low aggregate and dispersed idi
 osyncratic productivity shocks result in financial crises with elevated lo
 an defaults and occasional intermediary insolvencies. Output\, balance she
 et\, and price reactions are substantially more severe and persistent than
  in non-financial recession. Policies that limit intermediary leverage red
 istribute wealth from producers to intermediaries and savers. The benefits
  of lower intermediary leverage for financial and macro-economic stability
  are offset by the costs from more constrained firms who produce less outp
 ut.
LOCATION:UNIL\, Extranef\, room 126 https://planete.unil.ch/plan/?local=EX
 T-126
STATUS:CONFIRMED
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