Dispersion in Financing Costs and Development
Most aggregate theories of financial frictions model credit available at a single cost of financing but rationed. However, using a comprehensive firm-level credit registry, we document both high levels and high dispersion in credit spreads to Brazilian firms. We develop a quantitative dynamic general equilibrium model in which dispersion in spreads arise from intermediation costs and market power. Calibrating to the Brazilian data, we show that, for equivalent levels of external financing, dispersion has more profound impacts on aggregate development than single-price credit rationing and yields firm dynamics that are more consistent with observed patterns.
Date:
15 November 2022, 13:15 (Tuesday, 6th week, Michaelmas 2022)
Venue:
Manor Road Building, Manor Road OX1 3UQ
Venue Details:
Seminar Room G
Speaker:
Joe Kaboski (University of Notre Dame)
Organising department:
Department of Economics
Part of:
Macroeconomics Seminar
Booking required?:
Not required
Audience:
Members of the University only
Editors:
Melis Clark,
Emma Heritage
