This paper is a theoretical study into how credit constraints interact with aggregate economic activity over the … not only factors of production, but they also serve as collateral for loans. Borrowers' credit limits are affected by the … prices of the collateralized assets. And at the same time, these prices are affected by the size of the credit limits. The …

A growing literature shows that credit indicators forecast aggregate real outcomes. While researchers have proposed … simple, frictionless, model explains empirical findings commonly attributed to credit cycles. Our key assumption is that … firms have heterogeneous exposures to underlying economy-wide shocks. This leads to endogenous dispersion in credit quality …

Standard economic theory says that unsecured, high-interest, short-term debt -- such as borrowing via credit cards and … transitory income shock of unemployment. Instead, individuals smooth their credit card debt and overdrafts by adjusting … consumption. We first use detailed longitudinal information on debit and credit card transactions, account balances, and credit …

-constrained investors to take excessive risks. Ignored are unconstrained investors speculating on higher prices during credit booms. To … encouraged a bank/brokerage-credit-fueled stock-market bubble. The direct effect is a 25 cent increase in a stock's market …

The market for corporate credit is characterized by significant seasonal variation, both in interest rates and the …

"optimal" bubble by taxing credit when the "equilibrium" bubble is too high, and subsidizing credit when the "equilibrium …We study a dynamic economy where credit is limited by insufficient collateral and, as a result, investment and output … are too low. In this environment, changes in investor sentiment or market expectations can give rise to credit bubbles …

This paper develops a dynamic general equilibrium model that is intended to help clarify the role of credit market … developments in credit markets work to amplify and propagate shocks to the macroeconomy. In addition, we add several features to … allows us to study how credit market frictions may influence the transmission of monetary policy. In addition, we allow for …

We propose a model of money, credit and bubbles, and use it to study the role of monetary policy in managing asset … bubbles. In this model, bubbles pop up and burst, generating fluctuations in credit, investment and output. Two key insights … away from bubbles - and the credit that they sustain - to money, reducing intermediation, investment and growth. We explore …

We present a model of credit cycles arising from diagnostic expectations - a belief formation mechanism based on … nest rational expectations as a special case. In our model of credit cycles, credit spreads are excessively volatile, over …-react to news, and are subject to predictable reversals. These dynamics can account for several features of credit cycles and …