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Macroeconomic Models with Equity and Credit Rationing

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  • Bruce C. Greenwald
  • Joseph E. Stiglitz

Abstract

This paper presents a simple, general equilibrium macroeconomic model incorporating financial constraints, both credit and equity rationing, as well as other informational imperfections in labor and product markets, such as efficiency wage effects. A formulation somewhat analogous to the standard IS-LM model, but not suffering from the well known defects of that model, is derived. The mechanisms by which monetary policy affects the economy are described. Dynamics, including implications for long run growth, are investigated.

Suggested Citation

  • Bruce C. Greenwald & Joseph E. Stiglitz, 1990. "Macroeconomic Models with Equity and Credit Rationing," NBER Working Papers 3533, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:3533
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