# Accelerator, financial (financial accelerator)

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- Post ID: 588951
- Modified: 2023-07-25T20:46:48+00:00
- Language: en

## Definition

When the central bank increases the money supply and the interest rate falls as a result, CETERIS PARIBUS (among other things: when expectations are positive) investors and the government expand demand. - More orders reach upstream suppliers; - their self-financing capabilities and thus their creditworthiness (Borg strength) increase. - The result is an amplification of cyclical swings. - However, since there are more financially constrained companies in a recession than in a boom, this financial accelerator usually has a stronger effect in an economic downturn than in a boom. - See bear market, cyclical, insolvency cases, credit constraint carousel, values, cyclical. - Cf. Monthly Report of the Deutsche Bundesbank of July 2002, pp. 47 f., Monthly Report of the Deutsche Bundesbank of March 2005, pp. 16 ff. (with empirical studies). Attention: The financial encyclopedia is protected by copyright and may only be used for private purposes without express consent! University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec. Professor Dr. Eckehard Krah, Dipl.rer.pol. E-mail address: info@ekrah.com https://de.wikipedia.org/wiki/Gerhard_Ernst_Merk https://www.jung-stilling-gesellschaft.de/merk/ https://www.gerhardmerk.de/

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