€˜buffer stock’ model of optimal consumption in the presence of labor income uncertainty and credit constraints. Saving in the model … is affected by the gap between ‘target’ and actual wealth, with the target wealth determined by credit conditions and … uncertainty. An estimated structural version of the model suggests that increased credit availability accounts for most of the …

where aggregate shocks have a permanent effect on the unemployment rate. If agents' wealth decreases, the unemployment rate … increases for a potentially indefinite period. This makes unemployment rate dynamics path dependent as in Blanchard and Summers … (1987). I argue that this feature explains the persistence of the unemployment rate in the U.S. after the Great Recession …

government investment and private sector credit, while the major determinants of external performance are real effective exchange …

generate the main patterns observed in the sample during and following the Asian crisis, including the ensuing credit …

market prices, those based on normalized measures of total credit and those based on liabilities of financial intermediaries … credit and liabilities convey similar information and perform better as early warning indicators, but liabilities are more …

government fiscal balance, demographics, credit conditions, and global growth and financial stress. Our estimates imply that at …