Falling Interest Rates and Credit Reallocation: Lessons from General Equilibrium

主讲人：Alberto Martin（CREI，UPF，BSE，CEPR）

主持人：余昌华（北京大学国家发展研究院）

时间：2022年11月29日（周二）下午5:30-7:00（北京时间）

Zoom会议号：926 3889 7210

密码：908060

摘要：

 We show that in a canonical model with heterogeneous entrepreneurs, financial frictions, and an imperfectly elastic supply of capital, a fall in the interest rate has an ambiguous effect on aggregate economic activity. In partial equilibrium, a lower interest rate raises aggregate investment both by relaxing financial constraints and by prompting relatively less productive entrepreneurs to invest. In general equilibrium, however, this higher demand for capital raises its price and crowds out investment by more productive entrepreneurs. When this general-equilibrium induced reallocation is strong enough, a fall in the interest rate reduces aggregate output. We show that this reallocation effect is of the same order of magnitude as the balance-sheet channel, and that the interaction of both gives rise to boom-bust dynamics in response to a fall in the interest rate. Our novel mechanism contributes to the debate on whether and how low-interest environments may foster the proliferation of socially unproductive activities.

主讲人介绍：

Alberto Martin is a Senior Researcher at the Center for Research in International Economics (CREI), an Adjunct Professor at Universitat Pompeu Fabra, a Research Professor at the BSE and a Research Fellow at the CEPR (London). He is Member of the Editorial Board of the Review of Economic Studies and an Associate Editor of the Journal of International Economics. His work has appeared in the American Economic Review, the Journal of Finance, the Journal of the European Economic Association and the Journal of International Economics, among others. His research interests include Macroeconomics, Finance and International Economics.