We study whether a central bank should deviate from its objective of price stability to promote financial stability. We tackle this question within a textbook New Keynesian model augmented with capital accumulation and microfounded endogenous financial crises. We compare several interest rate...

We use detailed data for Iceland to examine two often-neglected aspects of the "exchange rate pass-through" problem. First, we investigate whether the pass-through coefficient varies with the degree of "international tradability" of goods. Second, we analyze if the pass-through coefficient...

This paper integrates a realistic implementation of monetary policy through the banking system into an incomplete-markets economy with wage rigidity. Monetary policy sets policy rates and alters the supply of reserves. These tools grant independent control over credit spreads and an interest...

We study financial stability with constraints on central bank intervention. We show that a forced reallocation of liquidity across banks can achieve fewer bank failures than a decentralized market for interbank loans, reflecting a pecuniary externality in the decentralized equilibrium....

We explore how consumption heterogeneity affects the international transmission mechanism of monetary shocks and the choice of optimal monetary policy in an open economy. Incorporating two types of agents (Ricardian versus Keynesian) into a standard open economy macro model, we find that there...

Using data across countries and over time we show that women are unhappier than men in unhappiness and negative affect equations, irrespective of the measure used - anxiety, depression, fearfulness, sadness, loneliness, anger - and they have more days with bad mental health and more restless...