Numerous commentaries have questioned both the legality and appropriateness of Federal Reserve lending to banks during the recent financial crisis. This article addresses two questions motivated by such commentary: 1) Did the Federal Reserve violate either the letter or spirit of the law by...

We investigate the pairwise correlations of 11 U.S. fixed income yield spreads over a sample that includes the Great Financial Crisis of 2007-2009. Using cross-sectional methods and non- parametric bootstrap breakpoint tests, we characterize the crisis as a period in which pairwise correlations...

The authors analyze the usefulness of a new measure of nonfinancial leverage as an early warning indicator for financial instability and its consequences for economic growth.

Last year, Cyprus joined its neighbor Greece on the list of eurozone countries in financial crisis. Although Cyprus is one of the smallest economies in the euro area, following the announcement of the official financial aid package for Cyprus on March 16, 2013, bank investors in the rest of the...

This paper analyzes the Federal Reserve’s major policy actions in response to the financial crisis. The analysis is divided into the pre-Lehman and post-Lehman monetary policies. Specifically, I describe the pre- and post-Lehman monetary policy actions that I believe were appropriate and those...

The level of aggregate excess reserves held by U.S. depository institutions increased significantly at the peak of the financial crisis of 2007-09. Although the amount of aggregate reserves is almost entirely determined by the policy initiatives of the central bank that act on the asset side of...

This paper proposes a model of international trade with capital accumulation and financial intermediation. This is achieved by embedding the Melitz (2003) model into an incomplete-markets neoclassical framework with an endogenous credit market. The model preserves the analytical tractability of...