{"title":"流行病下的信贷周期理论","authors":"Feng Dong, Pengfei Wang, Zhiwei Xu","doi":"10.2139/ssrn.3876824","DOIUrl":null,"url":null,"abstract":"We develop a tractable dynamic theory linking endogenous credit cycles with conditions in the labor market, in which a pandemic may cripple credit markets and even cause a credit collapse by freezing the labor supply. We execute the idea in a general equilibrium framework with banks and financially constrained heterogeneous firms. In the static model, a modest pandemic disrupts the credit markets only at the intensive margin by decreasing the labor supply. A worsening pandemic can trigger a credit crisis, followed by a discontinuous sharp fall in aggregate output. By extending to a dynamic general equilibrium setting, we show that this mechanism can generate endogenous boom-bust credit cycles. Credit injection per se cannot adequately stabilize the economy. The lockdown policy combined with subsidizing firms turns out to be an efficient policy package to curb pandemic-induced recession.","PeriodicalId":331807,"journal":{"name":"Banking & Insurance eJournal","volume":null,"pages":null},"PeriodicalIF":0.0000,"publicationDate":"2021-06-30","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":"{\"title\":\"A Theory of Credit Cycles under Pandemic\",\"authors\":\"Feng Dong, Pengfei Wang, Zhiwei Xu\",\"doi\":\"10.2139/ssrn.3876824\",\"DOIUrl\":null,\"url\":null,\"abstract\":\"We develop a tractable dynamic theory linking endogenous credit cycles with conditions in the labor market, in which a pandemic may cripple credit markets and even cause a credit collapse by freezing the labor supply. We execute the idea in a general equilibrium framework with banks and financially constrained heterogeneous firms. In the static model, a modest pandemic disrupts the credit markets only at the intensive margin by decreasing the labor supply. A worsening pandemic can trigger a credit crisis, followed by a discontinuous sharp fall in aggregate output. By extending to a dynamic general equilibrium setting, we show that this mechanism can generate endogenous boom-bust credit cycles. Credit injection per se cannot adequately stabilize the economy. The lockdown policy combined with subsidizing firms turns out to be an efficient policy package to curb pandemic-induced recession.\",\"PeriodicalId\":331807,\"journal\":{\"name\":\"Banking & Insurance eJournal\",\"volume\":null,\"pages\":null},\"PeriodicalIF\":0.0000,\"publicationDate\":\"2021-06-30\",\"publicationTypes\":\"Journal Article\",\"fieldsOfStudy\":null,\"isOpenAccess\":false,\"openAccessPdf\":\"\",\"citationCount\":\"0\",\"resultStr\":null,\"platform\":\"Semanticscholar\",\"paperid\":null,\"PeriodicalName\":\"Banking & Insurance eJournal\",\"FirstCategoryId\":\"1085\",\"ListUrlMain\":\"https://doi.org/10.2139/ssrn.3876824\",\"RegionNum\":0,\"RegionCategory\":null,\"ArticlePicture\":[],\"TitleCN\":null,\"AbstractTextCN\":null,\"PMCID\":null,\"EPubDate\":\"\",\"PubModel\":\"\",\"JCR\":\"\",\"JCRName\":\"\",\"Score\":null,\"Total\":0}","platform":"Semanticscholar","paperid":null,"PeriodicalName":"Banking & Insurance eJournal","FirstCategoryId":"1085","ListUrlMain":"https://doi.org/10.2139/ssrn.3876824","RegionNum":0,"RegionCategory":null,"ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"","JCRName":"","Score":null,"Total":0}
We develop a tractable dynamic theory linking endogenous credit cycles with conditions in the labor market, in which a pandemic may cripple credit markets and even cause a credit collapse by freezing the labor supply. We execute the idea in a general equilibrium framework with banks and financially constrained heterogeneous firms. In the static model, a modest pandemic disrupts the credit markets only at the intensive margin by decreasing the labor supply. A worsening pandemic can trigger a credit crisis, followed by a discontinuous sharp fall in aggregate output. By extending to a dynamic general equilibrium setting, we show that this mechanism can generate endogenous boom-bust credit cycles. Credit injection per se cannot adequately stabilize the economy. The lockdown policy combined with subsidizing firms turns out to be an efficient policy package to curb pandemic-induced recession.