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Seminarios académicos y conferencias

Nobuhiro Kiyotaki, Princeton University

"Credit Horizons"

Coautoreado con John Moore y Shengxing Zhang

16 Abril 2021 - 12:00 hrs. (horario excepcional)

Vía Zoom

Abstract: Why do firms borrow largely against near-term revenues? Does this mean they are unable to raise much funding against the long-term horizon? In this paper, we develop a model of credit horizons. A question of particular concern to us is whether persistently low interest rates can reduce aggregate investment and growth. With this in mind, our model is of a small open economy where the world interest rate is taken to be exogenous. We show that a permanent fall in the interest rate can reduce aggregate investment and growth, and even lead to a drop in the welfare of everyone: a Pareto deterioration. We use our framework to examine how credit horizons interact with firm dynamics and the evolution of productivity.