The External Finance Premium and the Macroeconomy : US post-WWII Evidence

@inproceedings{Graeve2006TheEF,
  title={The External Finance Premium and the Macroeconomy : US post-WWII Evidence},
  author={Ferre De Graeve},
  year={2006}
}
  • Ferre De Graeve
  • Published 2006
This paper embeds the …nancial accelerator into a medium-scale DSGE model and estimates it using Bayesian methods. Incorporation of …nancial frictions enhances the model’s description of the main macroeconomic aggregates. The …nancial accelerator accounts for approximately ten percent of monetary policy transmission. The model-consistent premium for external …nance compares well to observable proxies of the premium, such as the high-yield spread. Fluctuations in the external …nance premium are… CONTINUE READING
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