00000nam 2200000zi 4500 9.902745 CaOODSP 20240209100315 m o d f cr |n||||||||| 210820t20212021oncd ob f|0| 0 eng d CaOODSP eng rda CaOODSP n-cn--- FB3-5/2021-12E-PDF Li, Jiaqi (Economist) author. Imperfect banking competition and macroeconomic volatility : a DSGE framework / by Jiaqi Li. Ottawa, Ontario, Canada : Bank of Canada = Banque du Canada, 2021. ©2021 1 online resource (ii, 50 pages) : charts. text txt rdacontent computer c rdamedia online resource cr rdacarrier Staff working paper = Document de travail du personnel, 1701-9397 ; 2021-12 "Last updated: March 12, 2021." Includes bibliographical references (pages 47-50). "This paper studies the impact of imperfect banking competition on aggregate fluctuations using a DSGE framework that features a Cournot banking sector. The paper highlights a new propagation mechanism of imperfect banking competition that operates via the dynamics of the expected marginal product of capital. Since capital is partly financed by bank loans, a higher expected return on capital implies that firms are more willing to borrow to invest in capital, making their capital and thus loan demand more inelastic. Market power enables banks to take advantage of the lower loan demand elasticity by charging a higher loan rate markup. Given that different shocks affect the dynamics of the expected return on capital differently, this paper finds that while the loan rate markup after a contractionary monetary policy shock increases and thus amplifies aggregate fluctuations, the impact of imperfect banking competition after a productivity shock is less clear and depends on the persistence of the shock"--Abstract, page ii. Business cycles Econometric models. Interest rates Econometric models. Cycles économiques Modèles économétriques. Taux d'intérêt Modèles économétriques. Bank of Canada, issuing body. Staff working paper (Bank of Canada) 2021-12. (CaOODSP)9.806221 PDF 882 KB https://publications.gc.ca/collections/collection_2021/banque-bank-canada/FB3-5-2021-12-eng.pdf