Financial Constraints , Endogenous Markups , and Self - fulfilling Equilibria
نویسندگان
چکیده
3 We show that self-fulfilling equilibria and indeterminacy can easily arise in a simple financial accelerator model with reasonable 4 parameter calibrations and without increasing returns in production. A key feature for generating indeterminacy in our model is 5 the countercyclical markup due to the procyclical loan to output ratio. We illustrate, via simulations, that our financial accelerator 6 model can generate rich business cycle dynamics, including hump-shaped output in response to demand shocks as well as serial 7 autocorrelation in output growth rates. 8
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