What are the macroeconomic implications of higher leveraged borrowing? To address this question, we develop a business cycle model with credit frictions in which firms reallocate capital among themselves through the credit market. We find that looser collateral requirements moderate the...

This paper develops a model of a small open economy integrated in a monetary union. The model incorporates the standard nominal and real frictions in the literature. The parameters of the model are calibrated to the Portuguese data and the effects of the standard monetary policy shock are studied.

This paper quantifies the role of expectation-driven cycles for housing market fluctuations in the United States. We find that news shocks: (1) account for a sizable fraction of the variability in house prices and other macroeconomic variables over the business cycle and (2) significantly...

This paper analyses the monetary transmission mechanism in a monetary union with a segmented financial market. Differences in the households' information sets imply that a money supply shock yields permanently heterogeneous allocations across households. The distribution of liquidity is...

This paper compares the monetary transmission mechanism in the US and the 3 largest economies of the euro area. We start by showing that the dynamic responses to a monetary policy shock in each of the four countries are analogous. A model with a small set of frictions that broadly accounts for...

This paper analyzes housing market boom-bust cycles driven by changes in households' expectations. We explore the role of expectations not only on productivity but on several other shocks that originate in the housing market, the credit market and the conduct of monetary policy. We find that, in...

This paper studies the potential gains of monetary and macro-prudential policies that lean against news-driven boom-bust cycles in housing prices and credit generated by expectations of future macroeconomic developments. First, we find no trade-off between the traditional goals of monetary...

We augment a medium-scale DSGE model with monetary policy news shocks and …t it to US data. Monetary policy news shocks improve the performance of the model both in terms of marginal data density and in terms of its ability to match the empirical moments of the variables used as observables. We...

This paper assesses the usefulness of business surveys as a source of information for investment developments in Portugal. This will be achieved by what will be named a “fishing contest”, where the “participants” are bridge models, models based on principal components (derived from...

This paper takes the neo classical model of the investment decision of the firm and adds a Moral Hazard problem to it. The Moral Hazard problem, which arises due to the separation between ownership and control, induces empirical results from sample splits, which are usually interpreted as a sign...