Banks’ leverage behaviour in a two-agent New Keynesian model

Andrea Boitani, Chiara Punzo

Risultato della ricerca: Working paper

2 Citazioni (Scopus)


In a NK model with two types of rational agents, savers and capitalists, and non- maximizing banks, …nancial shocks do a¤ect the macroeconomic dynamics depending on banks’behaviour as for their leverage ratio. We …rst show that the level of banks’ leverage - which may be imposed by banks regulation - a¤ects the steady state level of output, employment and consumption, as might be expected in a non-Modigliani- Miller world. Di¤erent banks’ behaviour after a shock has widely di¤erent e¤ects on the macroeconomic dynamics: passive leverage results to be shock absorbing and capable of neutralizing an initial …nancial shock, whilst procyclical behaviour implies higher and more persistent instability and distributive e¤ects than the constant lever- age behaviour. Finally, we show that the interaction of procyclical leverage with hysteresis in output and employment stregthens the persistence of financial shocks.
Lingua originaleEnglish
EditoreDipartimento di Economia e Finanza, Università Cattolica del Sacro Cuo
Numero di pagine29
Stato di pubblicazionePubblicato - 2018


  • Banks
  • Leverage
  • New Keynesian
  • Two-Agent


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