Discussion Paper

No. 2008-40 | December 16, 2008
How We Might Model a Credit Squeeze, and Draw Some Policy Implications


This paper endeavours to illustrate the consequences of a credit squeeze by inserting a standard model of retail banks into some familiar macroeconomic models. Some possible policy conclusions are drawn about the benefits of incentives to increase lending at these times, and to reduce it in much better times.

Paper submitted to the special issue “Learning from the Financial Crisis

JEL Classification:

D53, D86, G32


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Cite As

Peter Sinclair (2008). How We Might Model a Credit Squeeze, and Draw Some Policy Implications. Economics Discussion Papers, No 2008-40, Kiel Institute for the World Economy. http://www.economics-ejournal.org/economics/discussionpapers/2008-40

Comments and Questions

Anonymous - Referee Report
February 13, 2009 - 14:56

see attached file

Anonymous - Referee Report
July 21, 2009 - 16:02

See attached file

Anonymous - Editors Decision
September 03, 2009 - 11:34

The referee reports on the paper by Professor Sinclair are both positive. Papers whose models can give insights on the current crisis are highly needed. This paper is an excellent example of this. Hence, the paper should be accepted for publication.