Seminar

Credit Crunches and Credit Allocation in a Model of Entrepreneurship

Marco Bassetto (Federal Reserve Bank of Chicago)

June 18, 2012, 17:00–18:30

Toulouse

Room MF 323

Political Economy Seminar

Abstract

We study the effects of credit shocks in a model with heterogeneous entrepreneurs, financing constraints, and a realistic firm size distribution. As entrepreneurial firms can grow only slowly in this set-up, we show that, by reducing entrepreneurial firm size, negative shocks have a very persistent effect on real activity.