random and therefore create liquidity risk, which in turn determines the supply of credit and the money multiplier. We study … important role of disruptions in interbank markets, followed by a persistent credit demand shock. …

recession generated by a credit crunch. The model can be used to study the effects on the main macroeconomic variables, and on … the welfare of each individual of alternative monetary and fiscal policies following the credit crunch. The model …

This paper examines the macroeconomic implications of sovereign credit risk in a business cycle model where banks are …) sovereign credit risk was recessionary and that ii) the risk channel was sizable. I then use the model to evaluate the effects … these credit market interventions. …

Many economists have worried about changes in the demand for money, since money demand shocks can affect output … variability and have implications for monetary policy. This paper studies the theoretical implications of changes in money demand … for the nonneutrality of money in the limited participation (liquidity) model and the predetermined (sticky) price model …

This paper analyzes the effects of money injections on interest rates and exchange rates in a model in which agents … must pay a Baumol-Tobin style fixed cost to exchange bonds and money. Asset markets are endogenously segmented because this … fixed cost leads agents to trade bonds and money only infrequently. When the government injects money through an open market …