How do housing bubbles affect other economic sectors? We show that in the presence of collateral constraints, a bubble … initially raises housing credit demand and crowds out credit to non-housing firms. If the bubble lasts, however, housing credit … repayments raise banks' net worth and expand credit supply, so that crowding-out eventually gives way to crowding-in. This is …

How do housing bubbles affect other economic sectors? We show that in the presence of collateral constraints, a bubble … initially raises housing credit demand and crowds out credit to non-housing firms. If the bubble lasts, however, housing credit … repayments raise banks' net worth and expand credit supply, so that crowding-out eventually gives way to crowding-in. This is …

This paper develops a DSGE model where banks use short-term deposits to provide firms with long-term credit. The demand … for long-term credit arises because firms borrow in order to finance their capital stock which they only adjust at …

, financial shocks such as borrower defaults, collateral shocks and credit supply effects amplify economic downturns by reducing … the flow of credit from banks to the real sector. In this novel application to the euro area, we introduce capital …