#1998-017A "Money Credit and the Cyclical Behavior of Household Investment"
by Victor E. Li, and Chia-Ying Chang
September 1998

This paper focuses on a monetary explanation of two business cycle regularities: (i) business and household investment are positively correlated and procyclical and (ii) household investment tends to lead business investment. We construct a general equilibrium framework that explicitly incorporates a credit sector where real resources are employed in the production of costly household and business credit services. More...