@article{20.500.12766/514,
year = {2020},
url = {https://hdl.handle.net/20.500.12766/514},
abstract = {After the financial crisis of 2007, in many economies, public and private debt have moved in opposite directions, as opposed to pre-2007 evidence. Private deleverage and public debt build-up may affect the recovery path of countries after a recession. In a new Keynesian model with financial frictions, we show that when the economy is hit by a credit risk shock, the negative correlation arising between public and private debt amplifies the response of GDP. In our setup, the traditional monetary-fiscal policy mix is not enough to offset this private-public debt mechanism and therefore bring back economic stability. When macroprudential policy is part of the policy mix, the private-public debt channel can be broken. Interestingly, depending on the macroprudential instrument, a trade-off may arise between private debt and output stabilization.},
publisher = {Elsevier},
title = {Financial frictions and stabilization policies},
doi = {10.1016/j.econmod.2019.10.019},
journal = {Economic Modelling},
volume = {89},
author = {Blás, Beatriz de and Malmierca Ordoqui, María},
}