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 the Federal Reserve’s announcements of forward guidance and large
Scale asset purchases had large and desired effects on asset prices but they do not tell us how
long such effects last.
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.
We study the use of intermediated assets as media of exchange in a neo-
classical growth model. An intermediary is delegated control over productive
capital and finances itself by issuing claims against the revenue generated by
We use a general equilibrium finance model that features explicit government purchases
of private debts to shed light on some of the principal working mechanisms of the Federal
Reserve’s large-scale asset purchases (LSAP) and their macroeconomic effects.
This paper deals with a classic development question: how can the process of economic
development – transition from stagnation in a traditional technology to industrialization
and prosperity with a modern technology – be accelerated?
This paper evaluates the most appropriate ways to model diffusion and jump features of high-frequency exchange rates in the presence of intraday periodicity in volatility. We show that periodic volatility distorts the size and power of conventional tests of Brownian motion, jumps and (in)finite activity.