Bassetto, M;
Cagetti, M;
De Nardi, M;
(2015)
Credit crunches and credit allocation in a model of entrepreneurship.
REVIEW OF ECONOMIC DYNAMICS
, 18
(1)
53 - 76.
10.1016/j.red.2014.08.003.
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Abstract
We study the effects of credit shocks in a model with heterogeneous entrepreneurs, financing constraints, and a realistic firm-size distribution. As entrepreneurial firms can grow only slowly and rely heavily on retained earnings to expand the size of their business, we show that, by reducing entrepreneurial firm size and earnings, negative shocks have a very persistent effect on real activity. In determining the speed of recovery from an adverse economic shock, the most important factor is the extent to which the shock erodes entrepreneurial wealth.
| Type: | Article |
|---|---|
| Title: | Credit crunches and credit allocation in a model of entrepreneurship |
| Open access status: | An open access version is available from UCL Discovery |
| DOI: | 10.1016/j.red.2014.08.003 |
| Publisher version: | http://dx.doi.org/10.1016/j.red.2014.08.003 |
| Additional information: | Copyright © 2015 The Authors. Published by Elsevier Inc. This is an open access article under the CC BY license |
| Keywords: | Credit crunches, Credit allocation, Entrepreneurship, Borrowing constraints, Wealth inequality |
| UCL classification: | UCL UCL > Provost and Vice Provost Offices > UCL SLASH UCL > Provost and Vice Provost Offices > UCL SLASH > Faculty of S&HS UCL > Provost and Vice Provost Offices > UCL SLASH > Faculty of S&HS > Dept of Economics |
| URI: | https://discovery.ucl.ac.uk/id/eprint/1465406 |
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