On Tuesday April 19, ADEMU held a mini conference on Macroeconomics of Financial Frictions at the University of Cambridge in association with The Cambridge–INET Institute. It featured three presentations of cutting-edge work on the link between financial frictions and the macroeconomy.

Within the mini conference, Simon Gilchrist (Boston University) argued that financial impediments may have prompted firms in crisis-affected Eurozone states to raise their relative prices during the downturn, contrary to conventional understanding.

Nicolas Crouzet (Kellog School of Management) provided a new model of corporate debt choice that could explain reduced aggregate investment in the face of banking-sector shocks, even when firms had access to bond finance.

Finally Nobu Kiyotaki (Princeton University) analysed emerging market crises under the hypothesis that a strong disruptive channel links exchange-rate devaluation to a reduction in bank lending capacity.

The ADEMU Project will also be holding another mini conference in association with the The Cambridge–INET Institute at the University of Cambridge, on May 10th. The topic for this mini conference will be Heterogeneous Agents and Macroeconomic Modelling. For more information and to register for this event, please see here.