Many economists believe that credit market distortions create a financial accelerator which destabilizes the economy. This paper shows that when credit market distortions arise from adverse selection they sometimes stabilize the economy rather than destabilize it. The stabilizing forces are closely related to forces that cause overinvestment in static models. When investment projects are equity...

We examine the implications of shortand long-run consumption growth fluctuations on the momentum and contrarian profits and the value premium in a unified economic framework. By allowing time-varying firm cash flow exposures to the short-run and long-run shocks in consumption growth, we find the otherwise standard intertemporal asset pricing model goes a long way in generating the momentum and ...

This paper analyzes a model in which the risk associated with entrepreneurial activity implies that the amount of such activity is procyclical and results in amplification and intertemporal propagation of productivity shocks. In the model risk averse agents choose between a riskless project and a risky project with higher expected output (‘the entrepreneurial activity’). Agents who become entre...

in this paper, the effect of financial liberalization on household’s budget liquidity constraint is analyzed with the use of an error correction model. financial liberalization will decline liquidity constraint, with expanding means of making future incomes available for present consumption. here a financial liberalization index for iran is defined using principal component analysis technique, ...

in this paper we examine the effect of the oil volatility, consumer price index (cpi) and industrial production on the stock market return in tehran stock exchange (tse). we used seasonal data in period 1378-1390 and auto regressive distributed method (ardl) for the short-term and long-term relationship between the variables. as results of research indicate, we find that there is positive short...

The research was conducted to prove empirically the impact of oil prices, interest rates, profitability, company size, and liquidity on leverage in mining sector companies Indonesia. study population 47 sector, using purposive sampling method, sample selected as many 32 a period 5 years from 2014 2018 so that 160 observations were obtained. data analysis method used random-effects model panel r...