American Economic Journal:
Macroeconomics
ISSN 1945-7707 (Print) | ISSN 1945-7715 (Online)
Information Dynamics and Macro Fluctuations
American Economic Journal: Macroeconomics
(pp. 372–400)
Abstract
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.Citation
Chousakos, Kyriakos, Gary Gorton, and Guillermo Ordoñez. 2023. "Information Dynamics and Macro Fluctuations." American Economic Journal: Macroeconomics 15 (4): 372–400. DOI: 10.1257/mac.20210101Additional Materials
JEL Classification
- D24 Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
- D83 Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
- E32 Business Fluctuations; Cycles
- E44 Financial Markets and the Macroeconomy
- G01 Financial Crises
- G32 Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill