Veranstaltung
08
Dec 2017

10:00 - 12:00
IWH Research Seminar

The Long-Run Real Effects of Banking Crises: Firm-Level Investment Dynamics and the Role of Wage Rigidity

This paper studies the long-run effects of credit market disruptions on real firm outcomes and how these effects depend on nominal wage rigidities at the firm level.

Who
Carlo Wix  (Goethe University Frankfurt, House of Finance)
Where
IWH conference room
Carlo Wix

Personal details

Carlo Wix is a Research Assistant at Goethe University Frankfurt - Research Center SAFE.

This paper studies the long-run effects of credit market disruptions on real firm outcomes and how these effects depend on nominal wage rigidities at the firm level. I trace out the long-run investment and growth trajectories of firms which are more adversely affected by a transitory shock to aggregate credit supply. Affected firms exhibit a temporary investment gap for two years following the shock, resulting in a persistent accumulated growth gap. I show that affected firms with a higher degree of wage rigidity exhibit a steeper drop in investment and grow more slowly than affected firms with more flexible wages.

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