Such a framework is not unusual and is compatible with the type of permanent and transitory distinction stressed in Milton Friedman’s permanent income hypothesis.4 More generally, in dynamic models, forward-looking agents’ responses to permanent shocks can be quite different from their responses to transitory shocks.
In corporate finance, the fund-raising environment of firms with low credit risks is accommodative on the whole, but with regard to firms with high credit risks, the stance of investors is severe and the lending attitudes of private banks continue to be cautious.