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Equity capital, bankruptcy risk and the liquidity trap

Levintal, Oren - 2011

This paper explains the emergence of liquidity traps in the aftermath of large-scale financial crises, as happened in the US 1930s, Japan 1990s and recently in the US and Europe. The paper introduces a new balance sheet channel that links equity capital to the risk-free interest rate. When...

Persistent link: https://www.econbiz.de/10010335985

The effects of the saving and banking glut on the U.S. economy

Justiniano, Alejandro; Primiceri, Giorgio E.; … - 2013

We use a quantitative equilibrium model with houses, collateralized debt and foreign borrowing to study the impact of global imbalances on the U.S. economy in the 2000s. Our results suggest that the dynamics of foreign capital flows account for between one fourth and one third of the increase in...

Persistent link: https://www.econbiz.de/10010352184

Measuring the stability of a dynamic system: The case of the stock market turmoil 2007-2008

Bask, Mikael; Widerberg, Anna - 2010

The aim of this paper is to demonstrate how the change in actual and potential market risks in the Dow Jones Industrial Average (DJIA) during the two-year period 2007-2008 can be analyzed with the help of-analysis. In the empirical analysis, the average of the Lyapunov exponents for the dynamic...

Persistent link: https://www.econbiz.de/10010321428

External and public debt crises

Arellano, Cristina; Atkeson, Andrew; Wright, Mark - 2015

The recent debt crises in Europe and the U.S. states feature similar sharp increases in spreads on government debt but also show important differences. In Europe, the crisis occurred at high government indebtedness levels and had spillovers to the private sector. In the United States, state...

Persistent link: https://www.econbiz.de/10011460678

A Simple Model of Monetary Pollicy and Currency Crises

Aghion, Philippe; Bacchetta, Philippe; Banerjee, Abhijit - 1999

This paper analyzes the optimal interest rate policy in currency crises. Firms are credit constrained and have debt in domestic and foreign currency, a situation that may easily lead to a currency crisis. An interest rate increase has an ambiguous effect on firms since it both makes more...

Persistent link: https://www.econbiz.de/10011430009

Monetary Policy with Foreign Currency Debt

Bacchetta, Philippe - 2000

A major feature characterizing recent currency crises in emerging markets has been the large proportion of private foreign currency debt. This feature has made the conduct of monetary policy particularly difficult. This paper proposes a simple model to better understand these issues where firms...

Persistent link: https://www.econbiz.de/10011430013

Currency Crises and Monetary Policy in an Economy with Credit Constraints

Aghion, Philippe; Bacchetta, Philippe; Banerjee, Abhijit - 2000

This paper presents a simple model of currency crises which is driven by the interplay between the credit constraints of private domestic firms and the existence of nominal price rigidities. The possibility of multiple equilibria, including a "currency crisis" equilibrium with low output and a...

Persistent link: https://www.econbiz.de/10011430017

Bond pricing and the macroeconomy

Duffee, Gregory R. - 2012

This chapter reviews some of the academic literature that links nominal and real term structures with the macroeconomy. The main conclusion is that none of our models is consistent with basic properties of nominal yields. It is difficult to explain the average shape of the nominal yield curve,...

Persistent link: https://www.econbiz.de/10010397776

One Money, One Cycle? The EMU Experience

Gächter, Martin; Riedl, Aleksandra - 2013

We examine whether the introduction of the euro had a significantly positive impact on the synchronization of business … policy shocks in the euro area. Empirical evidence on this relationship is rare so far and su ers from methodical weaknesses … constructed on a year-by-year basis (1993-2011), we uncover a strong and robust empirical finding: the adoption of the euro has …

Persistent link: https://www.econbiz.de/10013370103

The international monetary (non-)order and the global capital flows paradox

Bibow, Jörg - 2008

This paper sets out to investigate the forces behind the so-called "global capital flows paradox" and related "dollar glut" observed in the era of advancing financial globalization. The supposed paradox is that the developing world has increasingly come to pursue policies that result in current...

Persistent link: https://www.econbiz.de/10010266438

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