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- W433520320 abstract "─ ─ 101 Abstract This paper reconsiders the amplification and propagation mechanism of the creditconstrained economy by highlighting the elasticity of substitution between capital and an asset used for collateral. We develop a generalized version of the Kiyotaki and Moore (1997, hereafter KM) model in which capital and land are combined in production with a constant elasticity of substitution (CES). The substitutability/complementarity between capital and land plays a crucial role in amplifying quantitative effects of the TFP shock. When the elasticity of substitution is unity as in the Cobb-Douglas production function, the amplification is small. On the other hand, when it is small and sufficiently less than unity, credit constraints amplify movements of real variables. The adjustment cost of investment, combined with the small elasticity of substitution, strengthens the amplification effect and yields an interesting propagation mechanism among the holding of land by debtors and investment." @default.
- W433520320 created "2016-06-24" @default.
- W433520320 creator A5065151029 @default.
- W433520320 date "2013-09-10" @default.
- W433520320 modified "2023-09-27" @default.
- W433520320 title "Reconsidering Business Cycles of Credit Constraints" @default.
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