Collateralized Assets Prices and Monetary Policy

DOI:  https://doi.org/10.12804/revistas.urosario.edu.co/economia/a.8116

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Published: Sep 4, 2019
Issue: Vol. 22 No. 2 (2019)
Section Articles


Keywords: Monetary policy credit collateralized assets general equilibrium

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Authors

Mauricio Arango
Department of Economics University of Illinois at Urbana-Champaign

Abstract

A well-informed and cautious financial system can improve the welfare outcome of an economy by making lenders surplus to borrowers. Nevertheless, in a crisis, the behavior of the financial system can become an amplifier of it, given that credit approval conditions rarely meet the standards. Therefore, a credit crunch may occur even in a low-interest ra- tes environment. This paper illustrates the aforementioned point by developing a general equilibrium model where the collateral credit condition defines the prudential behavior of the financial system. It and other conditions amplify the magnitude of a negative pro- ductivity shock
How to Cite
Arango, M. (2019). Collateralized Assets Prices and Monetary Policy. Revista Economía Del Rosario, 22(2), 155–185. https://doi.org/10.12804/revistas.urosario.edu.co/economia/a.8116
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