Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/150542
Authors: 
Punzi, Maria Teresa
Rabitsch, Katrin
Year of Publication: 
2016
Series/Report no.: 
FinMaP-Policy Letter 4
Abstract: 
[Introduction] Boom-bust cycles in asset prices and economic activity are a central issue in policy and academic debates. An increasing rate of default on mortgage loans in the U.S. precipitated the financial crisis of 2007. A large stock of debt and high asset prices have been both a cause and a consequence of the crisis because more borrowers had access to bigger loans at lower rates of interest. The prolonged recession and difficult recovery highlight the fact that financial frictions are a key driver of business cycle fluctuations. During normal times imbalances emerge and the financial sector can mitigate financial frictions. Yet, during periods of crisis wealth can be destroyed and the financial sector adds fragility and instability to the whole economy. [...]
Document Type: 
Working Paper

Files in This Item:
File
Size
770.97 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.