We construct a two-country New Keynesian model in which US government debt has an advantage as a superior collateral asset in the balance sheets of banks. The model can account for the observed response of the US dollar and US bond returns to a global downturn, in particular when the downturn is...

We quantify the macroeconomic effects of the tariff measures announced (but not entirely implemented yet) on Liberation Day (April 2nd, 2025) through the lens of a New-Keynesian two-country model calibrated to the US and the rest of the world. We study both a unilateral 10pp tariff increase and...