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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 ...
Working Paper
The financial accelerator and the flight to quality
Conference Paper
Commentary: financial crises and economic activity
Working Paper
Are banks dead? or, are the reports greatly exaggerated?
Conference Paper
Monetary policy and asset price volatility
Conference Paper
Are banks dead? or, are the reports greatly exaggerated?
Journal Article
Monetary policy and asset price volatility
Over the past twenty years the world's major central banks have been largely successful at bringing inflation under control. While it is premature to suggest that inflation is no longer an issue of great concern, it is quite conceivable that the next battles facing central bankers will lie on a different front. One development that has already concentrated the minds of policymakers is an apparent increase in financial instability, of which one important dimension is increased volatility of asset prices.> In a presentation at the Federal Reserve Banks of Kansas City's 1999 symposium, "New ...
Journal Article
The role of large banks in the recent U.S. banking crisis
This article argues that the poor performance of the U.S. banking industry in the 1980s was due mainly to the risk-taking of the largest banks, which was encouraged by the U.S. government's too-big-to-fail policy. The article documents the recent trend toward riskier bank portfolios and the corresponding decline in bank profitability. A breakdown of the data by location and by asset size reveals that bank problems were concentrated in areas with troubled industries (oil, real estate, and agriculture) and among banks with the largest assets. In a statistical study controlling for location, ...
Conference Paper
Developing country borrowing and domestic wealth
Conference Paper
Monetary policy rules in practice