NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Macroeconomic Models with Equity and Credit Rationing

Bruce C. Greenwald, Joseph E. Stiglitz

NBER Working Paper No. 3533 (Also Reprint No. r1751)
Issued in December 1990
NBER Program(s):   EFG

This paper presents a simple, general equilibrium macroeconomic model incorporating financial constraints, both credit and equity rationing, as well as other informational imperfections in labor and product markets, such as efficiency wage effects. A formulation somewhat analogous to the standard IS-LM model, but not suffering from the well known defects of that model, is derived. The mechanisms by which monetary policy affects the economy are described. Dynamics, including implications for long run growth, are investigated.

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Document Object Identifier (DOI): 10.3386/w3533

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