TY  - JOUR
AU  - Greenwald,Bruce C.
AU  - Stiglitz,Joseph E.
TI  - Financial Market Imperfections and Business Cycles
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 2494
PY  - 1993
Y2  - May 1993
UR  - http://www.nber.org/papers/w2494
L1  - http://www.nber.org/papers/w2494.pdf
N1  - Author contact info:
Bruce C. Greenwald
Columbia University
611 Uris Hall
New York, NY  10027
E-Mail: bg7@columbia.edu

Joseph E. Stiglitz
Uris Hall, Columbia University
3022 Broadway, Room 814
New York, NY  10027
Tel: 212/854-0671
Fax: 212/662-8474
E-Mail: jes322@columbia.edu
AB  - This paper develops a simple model of macroeconomic behavior which incorporates the impact of financial market "imperfections," such as those generated by asymmetric information in financial markets. These information asymmetries may lead to breakdowns in markets, like that for equity, in which risks arm shared. In particular, we analyze firm behavior in the presence of equity rationing and imperfect futures markets, in which there are lags in production. Aft a consequence, firms act in a risk-averse manner. We trace out the macroeconomic consequences, and show that they are able to account for many of the widely observed aspects of actual business cycles.
ER  -