期刊名称：IoES Working Paper Series / Institute of Economic Studies, University of Iceland
出版年度：2009
卷号：2009
期号：2
出版社：niversity of Iceland
摘要：One feature of economic recessions is the appearance of aggregate liquidity
shortages that can exacerbate the economic downturn. We develop a model in
which the demand for liquidity arises suddenly in response to continued funding
needs of partially completed investment projects whose outcomes are subject
to idiosyncratic shocks and moral hazard. When the economy experiences an
adverse aggregate productivity shock, incentive constraints that underlie equity
contracts may bind, provided the shock is severe enough. In this case, credit-
rationing appears, and the heightened demand for liquidity coincides with a
greater reluctance to take on equity positions or deepen investments in on-going
investment projects. The consequence is a reduction in new investment and
termination of on-going projects due to a lack of liquidity, thereby worsening
the economic slowdown.
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