Growth, Slowdowns, and Recoveries

44 Pages Posted: 8 Dec 2014 Last revised: 11 Dec 2017

See all articles by Francesco Bianchi

Francesco Bianchi

Duke University

Howard Kung

London Business School; Centre for Economic Policy Research (CEPR)

Gonzalo Morales

University of Alberta

Multiple version iconThere are 3 versions of this paper

Date Written: December 2014


We construct and estimate an endogenous growth model with debt and equity financing frictions to understand the relation between business cycle fluctuations and long-term growth. The presence of spillover effects from R&D imply an endogenous relation between productivity growth and the state of the economy. During the 2008 recession, technology utilization dropped precipitously, while R&D investment and long-term TFP growth were less affected. The opposite occurred during the 2001 recession. Contractionary shocks to external equity and debt financing are important for explaining the dynamics of the 2001 and 2008 recessions, respectively. Equity financing shocks are more important for explaining R&D investment while debt financing shocks are more important for physical investment.

Keywords: Bayesian methods, business cycles, DSGE model, endogenous growth, technology diffusion

Suggested Citation

Bianchi, Francesco and Kung, Howard and Morales, Gonzalo, Growth, Slowdowns, and Recoveries (December 2014). CEPR Discussion Paper No. DP10291. Available at SSRN:

Francesco Bianchi (Contact Author)

Duke University ( email )

100 Fuqua Drive
Durham, NC 27708-0204
United States

Howard Kung

London Business School ( email )

Sussex Place
Regent's Park
London NW1 4SA
United Kingdom

Centre for Economic Policy Research (CEPR) ( email )

United Kingdom

Gonzalo Morales

University of Alberta ( email )

Edmonton, AB T6G 2R3

Register to save articles to
your library


Paper statistics

Abstract Views
PlumX Metrics