Inside money, credit, and investment.

This paperpresentsamonetaryexplanationforseveralbusiness-cyclefacts:(i) householdandbusinessinvestmentareprocyclical,(ii)businessinvestmentlags householdinvestment,(iii)householdinvestmentispositivelycorrelatedwithM1,and (iv) householdcreditoutstandingispositivelycorrelatedwithandmorevolatilethan householdinvestment.Weextendastandard,dynamicgeneralequilibriummodelto includefinancialintermediaries,credit-producingfirms,andinside(bank-created) money.Thetransmissionofmonetaryshocksfacilitatedbycreditandinsidemoney creation inthemodelisabletoreconciletheserealandmonetaryobservations regarding thecyclicalbehaviorofinvestment.

Main Author: Dressler, Scott.
Other Authors: Li, Victor.
Language: English
Published: 2008
Online Access: http://ezproxy.villanova.edu/login?url=https://digital.library.villanova.edu/Item/vudl:178046