Overborrowing and systemic externalities in the business cycle under imperfect information

• 成果类型: Article
• 署名作者: Herrerno, Juan; Rondon-Moreno, Carlos
• 署名单位: University of California System; University of California San Diego; Central Bank of Chile
• 刊物名称: JOURNAL OF INTERNATIONAL ECONOMICS
• ISSN/ISSBN: 0022-1996
• DOI: 10.1016/j.jinteco.2025.104103
• 发表日期: 2025
• 关键词: Overborrowing; Macroprudential policy; information frictions

摘要

We study the interaction between imperfect information and financial frictions and their role in financial crises in small open economies. We use a model where households observe income growth but cannot distinguish whether the underlying income shocks are permanent or transitory, and borrowing is subject to a collateral constraint. We show that the combination of imperfect information and a borrowing constraint is a significant source of economic instability. Optimal macroprudential policy helps stabilize the economy by actively taxing debt. Furthermore, the interaction between the collateral constraint and the information friction reshapes the correlation between the optimal tax and the underlying components of income.