TY  - JOUR
AU  - Bernanke,Ben
AU  - Gertler,Mark
AU  - Gilchrist,Simon
TI  - The Financial Accelerator in a Quantitative Business Cycle Framework
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 6455
PY  - 1998
Y2  - March 1998
UR  - http://www.nber.org/papers/w6455
L1  - http://www.nber.org/papers/w6455.pdf
N1  - Author contact info:
Ben S. Bernanke
E-Mail: Rita.C.Proctor@frb.gov

Mark Gertler
Department of Economics
New York University
269 Mercer Street, 7th Floor
New York, NY 10003
Tel: 212/998-8931
Fax: 212/995-4186
E-Mail: mark.gertler@nyu.edu

Simon Gilchrist
Department of Economics
Boston University
270 Bay State Road
Boston, MA  02215
Tel: 617/353-6824
Fax: NA
E-Mail: sgilchri@bu.edu
AB  - This paper develops a dynamic general equilibrium model that is intended to help clarify the role of credit market frictions in business fluctuations, from both a qualitative and a quantitative standpoint.  The model is a synthesis of the leading approaches in the literature.  In particular, the framework exhibits a  financial accelerator,' in that endogenous developments in credit markets work to amplify and propagate shocks to the macroeconomy.  In addition, we add several features to the model that are designed to enhance the empirical relevance.  First, we incorporate money and price stickiness, which allows us to study how credit market frictions may influence the transmission of monetary policy.  In addition, we allow for lags in investment which enables the model to generate both hump-shaped output dynamics and a lead-lag relation between asset prices and investment, as is consistent with the data. Finally, we allow for heterogeneity among firms to capture the fact that borrowers have differential access to capital markets. Under reasonable parametrizations of the model, the financial accelerator has a significant influence on business cycle dynamics.
ER  -