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and real shocks, and the credibility component depends on the mean and risk of real asset returns. Thus, observed booms …
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Emerging markets business cycle models treat default risk as part of an exogenous interest rate on working capital …
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The interaction between credit frictions, financial innovation, and a switch from optimistic to pessimistic beliefs played a central role in the 2008 financial crisis. This paper develops a quantitative general equilibrium framework in which this interaction drives the financial amplification...
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