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Yang Han · Jun Ma

This paper proposes a shadow rate no-arbitrage dynamic term structure model (SDTSM) with drifting trends to estimate the long-run trend of the real interest rate using yield curve data from the U.S., …

Markus K. Brunnermeier · Yuliy Sannikov

This paper solves the full, global equilibrium dynamics (not just a linearization around the steady state) of an economy in which financially constrained "experts" intermediate capital, showing that …

Zhiguo He · Arvind Krishnamurthy · Konstantin Milbradt

What makes a sovereign bond a safe asset is not the strength of its fundamentals in absolute terms but their strength relative to the alternatives, together with the size of the debt outstanding -- …

Pierre-Olivier Gourinchas · Walker Ray · Dimitri Vayanos

The paper develops a two-country preferred-habitat model in which currency and bond markets are populated by different investor clienteles — currency traders with price-elastic demand for foreign …

Jess Benhabib · Feng Dong · Pengfei Wang · Zhenyang Xu

Why do corporate defaults cluster in recurring episodes rather than occurring smoothly? The paper asks whether observable fundamental factors — firm characteristics and macroeconomic variables — are …

Sang Rae Kim

This paper studies when a bank is more effective as a supplier of privately produced money-like safe assets (repo, commercial paper), finding that a bank produces safer, more liquid assets when (1) …

Bruno Pellegrino · Enrico Spolaore · Romain Wacziarg

Why do observed international investment positions and cross-country differences in rates of return to capital fail to conform to a frictionless capital-market benchmark? The paper asks how large the …

Ben S. Bernanke · Mark Gertler · Simon Gilchrist

Embedding a costly-state-verification debt contract -- in which a borrower's external finance premium depends inversely on net worth -- into an otherwise standard New Keynesian model, this chapter …

Francesco Giovanardi · Matthias Kaldorf

This paper asks two related questions about the intersection of climate policy and bank capital regulation. First, can differentiated bank capital requirements — imposing higher equity charges on …

Emil Holst Partsch · Ivan Petrella · Emiliano Santoro

Consumer durables account for a disproportionately large share of household expenditure fluctuations despite their small share of total private consumption. Two stylized facts motivate the paper: (1) …

Simon Gilchrist · Egon Zakrajšek

This 2012 American Economic Review paper by Simon Gilchrist and Egon Zakrajšek constructs a new corporate-bond credit spread index -- the "GZ spread" -- from a large panel of secondary-market bond …

Cristina Arellano

In a small open economy where a risk-averse government borrows from risk-neutral lenders using only non-contingent one-period bonds, default happens in equilibrium and happens in *recessions* -- the …

Julien Bengui · Louphou Coulibaly

Bengui and Coulibaly ask whether the pattern of capital flows observed during the 2021–2023 global monetary tightening cycle — whereby capital flowed from low-inflation to high-inflation countries — …

Stephen G. Cecchetti

This 1995 Federal Reserve Bank of St. Louis Review paper by Stephen Cecchetti surveys the empirical literature attempting to distinguish two competing theories of how monetary policy affects the real …

Lee K. Davison · Carlos D. Ramirez

Does deposit insurance promote financial depth by arresting the outflow of deposits from the banking system during periods of bank distress? The paper tests and quantifies the deposit-stabilizing …

Pablo Ottonello · Thomas Winberry

Combining high-frequency-identified monetary shocks with Compustat data, the paper shows that low-default-risk firms -- those with lower leverage and higher distance to default -- are substantially …

Kirstin Hubrich · Yves S. Schüler · Daniel Waggoner

This paper investigates the role of leverage of financial institutions in amplifying the transmission of financial shocks to the macroeconomy, with particular attention to whether that amplification …

Priit Jeenas

Contrary to treating corporate cash as simply negative debt, this paper shows that firms' liquid-asset holdings, not their leverage, robustly predict which firms cut investment most after a monetary …

Wenhao Li · Ye Li

Crises have cleansing effects—low-quality firms face greater financial shortfalls and invest less than high-quality firms—but public credit support dampens these effects by reducing financing cost …

Emanuele Ciola · Gabriele Tedeschi

This paper investigates how the endogenous structure of credit, deposit, and interbank networks shapes business cycle fluctuations and large financial crises in the U.S. economy.

Emmanuel De Veirman · Jasper De Jong

De Veirman and de Jong develop a new approach to estimating the macroeconomic effects of changes in regulatory loan-to-value (LTV) limits on mortgage loans. The central questions are: (1) how do …

Sebastian Doerr · Thomas Drechsel · Donggyu Lee

The paper establishes a causal link from rising top income shares to reduced net job creation at small firms, working through a bank funding channel rooted in non-homothetic household portfolio …

Sergio Villalvazo

This paper studies the cross-sectional dimension of Fisher's (1933) debt-deflation mechanism as it operates during Sudden Stop crises — episodes characterized by large, abrupt reversals in the current …

Ben S. Bernanke · Mark Gertler

This 1995 Journal of Economic Perspectives paper by Ben Bernanke and Mark Gertler surveys the "credit channel" of monetary policy transmission — described explicitly as an amplifying mechanism, not an …

Maximilian Grimm · Òscar Jordà · Moritz Schularick · Alan M. Taylor

This paper provides the first long-run causal evidence that a persistently loose stance of monetary policy — defined as extended periods of low interest rates relative to the neutral rate — …

George J. Bratsiotis · Kasun D. Pathirage

This paper introduces a four-agent estimated New Keynesian DSGE model—comprising banked simple households, underbanked simple households, firm owners, and bank owners—to examine agent-specific and …

Frédéric Boissay · Fabrice Collard · Jordi Galí · Cristina Manea

This paper asks whether a central bank should deviate from strict inflation targeting (SIT) to promote financial stability, studying the question in a textbook New Keynesian model augmented with …

Florin O. Bilbiie

THANK, a tractable heterogeneous-agent New Keynesian model built around a single statistic for the cyclicality of income inequality, shows that the conditions needed for HANK-style amplification of …

Mark Gertler · Peter Karadi

This 2015 American Economic Journal: Macroeconomics paper by Mark Gertler and Peter Karadi uses a "proxy SVAR" — a structural VAR identified with external instruments rather than timing restrictions — …

Mark Gertler · Simon Gilchrist

This 1994 Quarterly Journal of Economics paper by Mark Gertler and Simon Gilchrist asks whether small manufacturing firms bear a disproportionate share of the manufacturing decline that follows …

Fiorella De Fiore · Marie Hoerova · Ciaran Rogers · Harald Uhlig

The paper studies the euro area interbank money markets during the global financial crisis (2007–09) and sovereign debt crisis (2010–15), documenting four empirical regularities and building a …

Benjamin M. Friedman · Kenneth N. Kuttner

This 1992 American Economic Review paper by Benjamin Friedman and Kenneth Kuttner asks whether money remains a reliable indicator of future nominal and real activity, and whether the predictive …

Ben S. Bernanke

Complementing Friedman and Schwartz's monetary account of the Great Depression, Bernanke argues that the banking panics and pervasive debtor insolvency of 1930-33 independently raised the real cost of …

Paolo Gelain · Marco Lorusso

This paper estimates the effect of oil price fluctuations on US banking variables using a Bayesian SVAR with sign restrictions following Baumeister and Hamilton (2019). Oil market shocks that lead to …

Árpád Ábrahám · Eva Carceles-Poveda · Yan Liu · Ramon Marimon

This paper asks how to optimally design a Financial Stability Fund (Fund) for a union of sovereign countries that must simultaneously (i) prevent sovereign default, (ii) provide risk-sharing and …

Kenan Huremović · Gabriel Jiménez · Enrique Moral-Benito · José-Luis Peydró · Fernando Vega-Redondo

This paper provides the first integrated empirical analysis of how bank credit supply shocks propagate through both the production network and the financial network simultaneously, using the universe …

Pedro Bordalo · Nicola Gennaioli · Andrei Shleifer · Stephen J. Terry

This paper incorporates diagnostic expectations — beliefs that overweight the representativeness of recent data, formalized as $E_t^\theta(A_{t+1}) = E_t(A_{t+1}) + \theta[E_t(A_{t+1}) - …

Ojasvita Bahl · Chetan Ghate · Debdulal Mallick

Governments in emerging market and developing economies (EMDEs) routinely intervene in agricultural markets — procuring grain and redistributing it to poor households — in response to food price …

Sebastian Di Tella

This paper builds a flexible-price model in which money's liquidity premium keeps real interest rates from falling when idiosyncratic risk rises, so money reduces investment rather than stabilizing …

Francesco Saverio Gaudio

This paper documents a puzzle for canonical limited-participation models: when U.S. stock market participation rose from 31.6% to 53% between 1989 and 2007—a period also characterized by the Great …

Enrique G. Mendoza

A standard small-open-economy business-cycle model, augmented with a collateral constraint that caps total debt -- including within-period working-capital loans -- at a fraction of the market value of …

Lucas Hafemann · Peter Tillmann

This 2020 International Journal of Central Banking paper by Lucas Hafemann and Peter Tillmann studies how ECB monetary policy transmits to the euro area as a whole and, separately, across individual …

Marvin J. Barth III · Valerie A. Ramey

This 2001 NBER Macroeconomics Annual paper by Marvin Barth and Valerie Ramey tests whether monetary policy operates through a supply-side "cost channel" -- in which a monetary contraction raises …

Jesper Böjeryd · Roine Vestman · Björn Tyrefors · Dany Kessel

This paper estimates a causal housing wealth effect on consumption using a quasi-natural experiment in Stockholm, Sweden. The identification exploits an unanticipated political decision — announced in …

C. Bora Durdu · Alex Martin · Ilknur Zer

US monetary tightening raises the probability of a banking crisis abroad, but only where the exposure to the United States is direct -- heavy bilateral trade or large dollar-denominated liabilities. …

Silvia Miranda-Agrippino · Hélène Rey

A single global factor extracted from a large panel of risky asset prices traded around the world falls sharply after a US monetary contraction, alongside deleveraging by global banks, a rise in …

Karlye Dilts Stedman · Andrew Hanson

The paper asks why unconventional monetary policy (UMP) spillovers from the European Central Bank (ECB) to the U.S. Treasury yield curve vary so substantially over time, and whether the time-varying …

Stephen G. Cecchetti · Tommaso Mancini-Griffoli · Machiko Narita · Ratna Sahay

Across nearly 1,000 listed financial firms in 21 countries, prolonged monetary easing raises leverage -- and for non-US firms, sustained easing in the United States raises leverage by more than easing …