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paper the central role played by limited domestic development in ex-ante (insurance) and ex-post (spot) financial markets in … generating this collective undervaluation of external resources and insurance. Within this structure, this paper studies several …
Persistent link: https://www.econbiz.de/10013219968
This paper analyzes the timing, pace and efficiency of the on- going job reallocation that results from product and process innovation. There are strong reasons why an efficient economy ought to concentrate both job creation and destruction during cyclical downturns, when the opportunity cost of...
Persistent link: https://www.econbiz.de/10013139984
The global economy has a chronic shortage of safe assets which lies behind many recent macroeconomic imbalances. This paper provides a simple model of the Safe Asset Mechanism (SAM), its recessionary safety traps, and its policy antidotes. Safety traps share many common features with...
Persistent link: https://www.econbiz.de/10013087881
options provides a cheap form of systemic insurance …
Persistent link: https://www.econbiz.de/10013089284
Financial assets provide return and liquidity services to their holders. However, during severe financial crises many asset prices plummet, destroying their liquidity provision function at the worst possible time. In this paper we present a model of fire sales and market breakdowns, and of the...
Persistent link: https://www.econbiz.de/10013155022
This paper is an attempt to enrich the characterization of the sluggish behavior of the aggregate price level. Our contribution to this vast literature is to explicitly consider microeconomic heterogeneity and its interaction with nonlinear microeconomic price adjustment policies. The model we...
Persistent link: https://www.econbiz.de/10012776846
Emerging market economies are fertile ground for the development of real estate and other financial bubbles. Despite these economies' significant growth potential, their corporate and government sectors do not generate the financial instruments to provide residents with adequate stores of value....
Persistent link: https://www.econbiz.de/10012784276
We provide a continuous-time “risk-centric” representation of the New Keynesian model, which we use to analyze the interactions between asset prices, financial speculation, and macro- economic outcomes when output is determined by aggregate demand. In principle, interest rate policy is...
Persistent link: https://www.econbiz.de/10012951344
The standard view of the political economy of public debt is that myopic and unconstrained politicians prefer to disregard intertemporal smoothing considerations and extract political rents as fast as possible. From this perspective, it seems that the world has much to celebrate, as most...
Persistent link: https://www.econbiz.de/10012759551
We propose a framework for understanding recurrent historical episodes of vigorous economic expansion accompanied by extreme asset valuations, as exhibited by the U.S. in the 1990s. We interpret this phenomenon as a high-valuation equilibrium with a low effective cost of capital based on...
Persistent link: https://www.econbiz.de/10012762624