Real credit cycles
We incorporate diagnostic expectations into a workhorse neoclassical business cycle model with heterogeneous firms and risky debt. A realistic degree of diagnostic overreaction estimated from US firm forecasts generates economic fragility during good times, countercyclical credit spreads, and boom-b...
| Main Authors: | , , , |
|---|---|
| Format: | Working paper |
| Language: | English |
| Published: |
National Bureau of Economic Research
2021
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