Download This PaperIndexed Debt Contracts and the Financial Accelerator
45 Pages Posted: 10 Aug 2011
Date Written: August 8, 2011
Abstract
This paper addresses the positive and normative implications of indexing risky debt to observable aggregate conditions. These issues are pursued within the context of the celebrated financial accelerator model of Bernanke, Gertler and Gilchrist (1999). The principal conclusions are that the optimal degree of indexation is significant, and that the business cycle properties of the model are altered under this level of indexation.
Keywords: Credit market frictions, Indexation
JEL Classification: E22, E32, E44
Suggested Citation: Suggested Citation
Carlstrom, Charles T. and Fuerst, Timothy S. and Paustian, Matthias, Indexed Debt Contracts and the Financial Accelerator (August 8, 2011). FRB of Cleveland Working Paper No. 11-17, Available at SSRN: https://ssrn.com/abstract=1906761 or http://dx.doi.org/10.2139/ssrn.1906761
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