"Do Credit Constraints Amplify Macroeconomic Fluctuations?"

 

6:00PM - 8:30 PM Tuesday,March 30, 2010

 

L’Olivier, 465 Davis Court, San Francisco, CA 94111

 Description:

The Chinese Finance Association CA Chapter cordially invites you to attendTCFA CA Advanced Financial Study Seminar (2010Q1), featured with a talk given by Dr. Zheng Liu, Research Advisor to Federal Reserve Bank of San Francisco, on the relationship between credit constraints and macroeconomic fluctuations.

The related paper of Dr. Liu’s talk proposes a financial mechanism that amplifies small economic shocks and transforms these shocks into large business cycle fluctuations. The model contains two key features that are relevant for the U.S. economy and may also be relevant to other countries such as China: (1) productive agents are credit constrained, so their ability to finance investment and production is constrained by the value of collateral assets; (2) shocks to asset demand (such as housing demand shocks) directly impact on the value of collateral assets and, through credit constraints, trigger a financial multiplier that amplifies macroeconomic fluctuations. As a result, findings of his paper may shed light on our understanding of some of China economy's issues.

Before joining Fed as research advisor, Dr. Liu taught at Clark University and Emory University as Assistant Professor and then Associate Professor (with tenure).  He got Ph.D. degree in Economics from University of Minnesota. Dr. Liu has published a dozen of academic papers in top economics journals.