Conference Paper

Financial innovations and macroeconomic volatility

Abstract: The volatility of US business cycles has declined during the last two decades. During the same period the financial structure of firms has become more volatile. In this paper we develop a model in which financial factors are central for generating economic fluctuations. Innovations in financial markets allow for greater financial flexibility and generate a lower volatility of output together with a higher volatility in the financial structure of firms.

Status: Published in Financial innovations and the real economy : a conference (2006, November 16-17)

Bibliographic Information

Provider: Federal Reserve Bank of San Francisco

Part of Series: Proceedings

Publication Date: 2006

Issue: Nov