Title of article :
Volatilityandgrowth:Creditconstraintsandthecomposition
of investment
Author/Authors :
Philippe Aghion، نويسنده ,
Issue Information :
روزنامه با شماره پیاپی سال 2010
Abstract :
How doesuncertaintyandcreditconstraintsaffectthecyclicalcompositionof
investmentandtherebyvolatilityandgrowth?Thispaperaddressesthisquestion
withinamodelwherefirmsengageintwotypesofinvestment:ashort-termone;anda
long-termone,whichcontributesmoretoproductivitygrowth.Becauseittakeslonger
to complete,long-terminvestmenthasarelativelylesscyclicalreturn;butitalsohasa
higherliquidityrisk.Thefirsteffectensuresthattheshareoflong-terminvestmentto
total investmentiscountercyclicalwhenfinancialmarketsareperfect;thesecond
impliesthatthissharemayturnprocyclicalwhenfirmsfacetightcreditconstraints.A
novelpropagationmechanismthusemerges:throughitseffectonthecyclical
compositionofinvestment,tightercreditcanleadtobothhighervolatilityandlower
meangrowth.Evidencefromapanelofcountriesprovidessupportforthemodel’skey
predictions
Keywords :
GrowthVolatilityCredit constraintsLiquidityBusiness cyclesAmplification
Journal title :
Journal of Monetary Economics
Journal title :
Journal of Monetary Economics
