Financial Accelerator

A financial theory that states that a small change in financial markets can produce a large change in economic conditions and create a feedback loop. The theory is attributed to Federal Reserve Board Chairman Ben Bernanke and fellow economists Mark Gertler and Simon Gilchrist. Bernanke’s belief in the financial accelerator may account for some of his policy decisions, such as cutting interest rates in the wake of the credit crisis of 2008-2010.

The financial accelerator idea may help to clarify the causes of both the booms and busts of the business cycle. For example, Bernanke and Gertler have written that the financial accelerator may explain why the Great Depression was so severe. It may also shed light on the subprime mortgage crisis.


Investment dictionary. . 2012.

Look at other dictionaries:

  • Financial accelerator — The financial accelerator effect occurs when a firm acquires large profits beyond previously required cash flows, allowing the firm to invest in positive net present value projects, which in turn increase profits further. This cycle of increased… …   Wikipedia

  • Financial crisis — For the 2008–2010 crisis, see Subprime mortgage crisis , Late 2000s financial crisis and Late 2000s recession. Economics …   Wikipedia

  • Naiot Venture Accelerator — Type technological Incubator Industry Venture Capital Founded 1997 …   Wikipedia

  • PowerUP (accelerator) — CyberStorm PPC604e accelerator board PowerUP boards were dual processor 68k–PowerPC accelerator boards designed by Phase5 Digital Products for Amiga computers. They had two different processors working in parallel, sharing the complete address… …   Wikipedia

  • Credit channel — The credit channel mechanism of monetary policy describes the theory that a central bank s policy changes affect the amount of credit that banks issue to firms and consumers for purchases, which in turn affects the real economy. Contents 1 Credit …   Wikipedia

  • Nueva Economía Keynesiana — No debe confundirse con neokeynesianismo. La Nueva economía keynesiana o Nuevo keynesianismo es una escuela del pensamiento económico que busca proveer fundaciones microeconómicas a la economía keynesiana. Se desarrolló como respuestas a las… …   Wikipedia Español

  • Cornell University — Cornell redirects here. For other uses, see Cornell (disambiguation). Cornell University Emblem of Cornell University Motto I would found an institution where any person can find instruction in any study …   Wikipedia

  • 2009–2011 Toyota vehicle recalls — Two of the vehicles under recall: the Toyota Camry (top) and the Toyota Corolla Three separate but related recalls of automobiles by Toy …   Wikipedia

  • Mathematics and Physical Sciences — ▪ 2003 Introduction Mathematics       Mathematics in 2002 was marked by two discoveries in number theory. The first may have practical implications; the second satisfied a 150 year old curiosity.       Computer scientist Manindra Agrawal of the… …   Universalium

  • Owen Graduate School of Management — Established 1969 Type Private Endowment $279 million (June 30, 2008) …   Wikipedia

Share the article and excerpts

Direct link
Do a right-click on the link above
and select “Copy Link”

We are using cookies for the best presentation of our site. Continuing to use this site, you agree with this.