Macroeconomic Models with Equity and Credit Rationing

43 Pages Posted: 9 Jun 2004 Last revised: 29 Aug 2010

See all articles by Bruce C. N. Greenwald

Bruce C. N. Greenwald

Columbia Business School - Finance and Economics; National Bureau of Economic Research (NBER)

Joseph E. Stiglitz

Columbia Business School - Finance and Economics; National Bureau of Economic Research (NBER)

Date Written: December 1990

Abstract

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.

Suggested Citation

Greenwald, Bruce and Stiglitz, Joseph E., Macroeconomic Models with Equity and Credit Rationing (December 1990). NBER Working Paper No. w3533. Available at SSRN: https://ssrn.com/abstract=226845

Bruce Greenwald (Contact Author)

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Joseph E. Stiglitz

Columbia Business School - Finance and Economics ( email )

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National Bureau of Economic Research (NBER) ( email )

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