Please use this identifier to cite or link to this item:
http://hdl.handle.net/10071/18138
Author(s): | Leão, E. R. Leão, P. R. |
Date: | 2006 |
Title: | Technological innovations and the interest rate |
Volume: | 89 |
Number: | 2 |
Pages: | 129 - 163 |
ISSN: | 0931-8658 |
DOI (Digital Object Identifier): | 10.1007/s00712-006-0205-7 |
Keywords: | RBC models Sectoral technological innovations Correlation between real interest rate and real output |
Abstract: | We build a dynamic general equilibrium model that adds a banking sector to the standard RBC model. We look at the response of the real interest rate to innovations in the banks' technology and in the nonbank firms' technology. While technological innovations in the nonbanking sector put upward pressure on the interest rate, technological innovations in banks exert downward pressure on the interest rate. This implies that, if the technological innovations in banks are strong enough, stochastic simulation experiments generate negative correlations between the real interest rate and current and future values of real output. This is especially significant because negative correlations between the interest rate and output are a key post-war U.S. business cycle fact difficult to replicate in benchmark dynamic models. |
Peerreviewed: | yes |
Access type: | Open Access |
Appears in Collections: | DE-RI - Artigos em revistas internacionais com arbitragem científica |
Files in This Item:
File | Description | Size | Format | |
---|---|---|---|---|
paper2revisedalex.pdf | Pós-print | 283,45 kB | Adobe PDF | View/Open |
Items in DSpace are protected by copyright, with all rights reserved, unless otherwise indicated.