Credit and Banking in a DSGE Model of the Euro Area

  title={Credit and Banking in a DSGE Model of the Euro Area},
  author={A. Gerali and S. Neri and L. Sessa and F. M. Signoretti},
  journal={Econometrics: Econometric & Statistical Methods - General eJournal},
  • A. Gerali, S. Neri, +1 author F. M. Signoretti
  • Published 2010
  • Economics
  • Econometrics: Econometric & Statistical Methods - General eJournal
  • This paper studies the role of credit-supply factors in business cycle fluctuations. For this purpose, we introduce an imperfectly competitive banking sector into a DSGE model with financial frictions. Banks issue collateralized loans to both households and firms, obtain funding via deposits and accumulate capital from retained earnings. Margins charged on loans depend on bank capital-to-assets ratios and on the degree of interest rate stickiness. Bank balance-sheet constraints establish a link… CONTINUE READING
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