The price of capital and the financial accelerator

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dc.contributor.author Pancrazi, Roberto
dc.contributor.author Seoane, Hernán
dc.contributor.author Vukotic, Marija
dc.date.accessioned 2017-09-12T14:38:39Z
dc.date.available 2018-12-01T23:00:07Z
dc.date.issued 2016-12
dc.identifier.bibliographicCitation Pancrazi, R., Seoane, H.D. and Vukotic, M. (2016). The price of capital and the financial accelerator. Economics Letters, v. 149, pp. 86-89.
dc.identifier.issn 0165-1765
dc.identifier.uri http://hdl.handle.net/10016/25223
dc.description.abstract The price of capital is a key determinant of the financial accelerator, a transmission mechanism of shocks generated through the capital accumulation process of entrepreneurs that borrow in credit markets with frictions. This paper shows that the procedure of approximating the price of old capital by the net-of-depreciation price of new capital, as used in many articles since Bernanke et al. (1999), has profound implications when the capital depreciation rate is positive. When accounting for the appropriate price of capital, the effects of the financial accelerator are even stronger than originally assessed. (C) 2016 Elsevier B.V. All rights reserved.
dc.description.sponsorship Hernán Seoane gratefully acknowledges support from Ministerio de Economía y Competitividad (Spain), grants ECO2014-56676-C2-1-P, MDM 2014-0431, and Comunidad de Madrid, MadEco-CM (S2015/HUM-3444).
dc.format.mimetype application/pdf
dc.language.iso eng
dc.publisher Elsevier
dc.rights © Elsevier
dc.rights Atribución-NoComercial-SinDerivadas 3.0 España
dc.rights.uri http://creativecommons.org/licenses/by-nc-nd/3.0/es/
dc.subject.other Financial accelerator
dc.subject.other Business fluctuations
dc.subject.other Investment adjustment cost
dc.subject.other Optimal-contracts
dc.title The price of capital and the financial accelerator
dc.type article
dc.subject.jel E30
dc.subject.jel E44
dc.subject.jel E50
dc.subject.eciencia Economía
dc.identifier.doi https://doi.org/10.1016/j.econlet.2016.10.022
dc.rights.accessRights openAccess
dc.relation.projectID Gobierno de España. ECO2014-56676-C2-1-P
dc.relation.projectID Gobierno de España. MDM 2014-0431
dc.relation.projectID Comunidad de Madrid. S2015/HUM-3444/MADECO-CM
dc.type.version acceptedVersion
dc.identifier.publicationfirstpage 86
dc.identifier.publicationlastpage 89
dc.identifier.publicationtitle Economics letters
dc.identifier.publicationvolume 149
dc.identifier.uxxi AR/0000018588
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