This paper provides a theory to explain the paradoxical features of the great housing
boom in China —the persistently faster-than-GDP housing price growth, exceptionally
high capital returns, and excessive vacancy rates.
The 1950s are often pointed to as a decade in which the Federal Reserve operated a particularly successful monetary policy. The present paper examines the evolution of Federal Reserve monetary policy from the mid-1930s through the 1950s in an effort to understand better the apparent success of policy in the 1950s.
A model of money, credit, and banking is constructed in which the differential pledgeability of collateral and the scarcity of collateralizable wealth lead to a term premium — an upward-sloping nominal yield curve.
Event studies show that Fed unconventional announcements of forward guidance and large scale
asset purchases had large and desired effects on asset prices but do not tell us how long such
In 2005, reforms made formal personal bankruptcy much more costly. Shortly after, the US
began to experience its most severe recession in seventy years, and while personal bankruptcy
rates rose, they rose only modestly given the severity of the rise in unemployment.
In this paper we show that price equalization does not imply zero barriers to trade.
There are many barrier combinations that deliver price equalization, but each combination
implies a different volume of trade.
Mortgage loans are a striking example of a persistent nominal rigidity. As a result, under
incomplete markets, monetary policy affects decisions through the cost of new mortgage
borrowing and the value of payments on outstanding debt.
The consensus in monetary policy circles that the Fed’s large-scale asset purchases, known as quantitative easing (QE), have significantly reduced long-term yields is due in part to event studies, which show that long-term yields decline on QE announcement days.
The nature of the business cycle appears to have changed. Prior to the 1990s, recoveries
from recessions were quick and steep; after the past three recessions, however, recoveries were
weak and prolonged.