Hello everyone
I have a question about the formation mechanism of finnacial friction. When I read a paper, the paper wrote there are two kinds of financial friction formation mechanism. One financial friction arises from capital accumulation and capital management, the other financial friction arises from capital borrowing, and the formation mechanism of these two types of financial friction is different, but the paper did not explain this specifically. So can anybody tell me what’s the difference between these tow kinds of financial friction, or can you suggest me some paper which explains this.
Thank you very much, looking forward to your reply!
Have a look at Ivan Becard’s “Financial Shocks and Comovements”. It explains the difference between frictions between firms banks and between banks and households
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Thank you very much! I will download it and learn it!