D. Delli Gatti
- Intertemporal Greenwald-Stiglitz
- Number of pages
- Amsterdam: University of Amsterdam
- CeNDEF Working Paper
- Volume | Edition (Serie)
- Document type
- Working paper
- Faculty of Economics and Business (FEB)
- Amsterdam School of Economics Research Institute (ASE-RI)
- In this short paper we cast the Greenwald-Stiglitz financial accelerator framework - which was originally defined in a period by period optimization setting - in an intertemporal context. In this way we overcome one of the most frequent objections to this approach according to which agents are myopic and do not choose optimally the capital structure of the firm. In our intertemporal setting firms optimize over an infinite horizon under the constraint of net worth accumulation.
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