The Origins of Aggregate Fluctuations in a Credit Network Economy

@article{Altinoglu2018TheOO,
  title={The Origins of Aggregate Fluctuations in a Credit Network Economy},
  author={Levent Altinoglu},
  journal={Board of Governors of the Federal Reserve System Research Series},
  year={2018}
}
  • Levent Altinoglu
  • Published 1 May 2018
  • Economics
  • Board of Governors of the Federal Reserve System Research Series
I show that inter-firm lending plays an important role in business cycle fluctuations. I first build a tractable network model of the economy in which trade in intermediate goods is financed by supplier credit. In the model, a financial shock to one firm affects its ability to make payments to its suppliers. The credit linkages between firms propagate financial shocks, amplifying their aggregate effects by about 30 percent. To calibrate the model, I construct a proxy of inter-industry credit… Expand
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