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Conference Paper
Monetary policy and asset price volatility
Conference Paper
Financial factors in business fluctuations
Working Paper
Wholesale Banking and Bank Runs in Macroeconomic Modeling of Financial Crises
There has been considerable progress in developing macroeconomic models of banking crises. However, most of this literature focuses on the retail sector where banks obtain deposits from households. In fact, the recent financial crisis that triggered the Great Recession featured a disruption of wholesale funding markets, where banks lend to one another. Accordingly, to understand the financial crisis as well as to draw policy implications, it is essential to capture the role of wholesale banking. The objective of this paper is to characterize a model that can be seen as a natural extension of ...
Working Paper
Technology Innovation and Diffusion as Sources of Output and Asset Price Fluctuations
We develop a model in which innovations in an economy's growth potential are an important driving force of the business cycle. The frame- work shares the emphasis of the recent ?new shock? literature on revisions of beliefs about the future as a source of fluctuations, but differs by tieing these beliefs to fundamentals of the evolution of the technology frontier. An important feature of the model is that the process of moving to the frontier involves costly technology adoption. In this way, news of improved growth potential has a positive effect on current hours. As we show, the model also ...
Conference Paper
Are banks dead? or, are the reports greatly exaggerated?
Report
Micro and Macro Cost-Price Dynamics in Normal Times and During Inflation Surges
We develop a unified approach to studying cost-price dynamics in the cross-section of firms in order to jointly explain the time series of aggregate inflation and the frequency of price changes, both during normal times and inflation surges. A key novelty is the use of microdata on firms’ prices and production costs to construct an empirical measure of price gaps—the deviation between a firm’s listed and optimal price. Conditional on the path of aggregate cost shocks extracted from the data, a state-dependent pricing model with strategic complementarities accounts well for both the ...
Conference Paper
Agency costs, collateral, and business fluctuations
Working Paper
The financial accelerator and the flight to quality