American Economic Journal: Macroeconomics
no. 4, October 2023
The amount of information produced about firms' productivities and about the quality of collateral backing their loans varies over time. These information dynamics determine the evolution of credit, output and productivity, which feeds back into incentives to produce information. We characterize this intricate dynamic relation. A credit boom happens when information about collateral depreciates. A financial crisis happens when information about collateral is suddenly generated. Information about firms' individual productivities over credit booms can prevent or tame the crisis, acting as an endogenous macroprudential force.
Chousakos, Kyriakos, Gary Gorton, and Guillermo Ordoñez.
"Information Dynamics and Macro Fluctuations."
American Economic Journal: Macroeconomics,
Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
Business Fluctuations; Cycles
Financial Markets and the Macroeconomy
Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill