Government guarantees of private debt deplete equity. The depletion is greatest during periods when the probability of … asset values to market. Less widely recognized is that guaranteed debt creates an incentive to pay equity out to owners … debt up to the limit the government permits. Declines in asset values raise debt in relation to asset values and thus …

of policy have recently been of greater importance: changes in the supply of bank reserves, changes in the assets … substitute for conventional interest-rate policy, but purchases of illiquid assets are particularly likely to improve welfare …

market equity values diverge, especially during crises; (2) Tobin's Q predicts future bank profitability; (3) neither book …

We analyze contagious sovereign debt crises in financially integrated economies. Under financial integration banks … optimally diversify their holdings of sovereign debt in an effort to minimize the costs with respect to an individual country …'s sovereign debt default. While diversification generates risk diversification benefits ex ante, it also generates contagion ex …

We analyze government interventions to alleviate debt overhang among banks. Interventions generate two types of rents …

, negative equity does not make homeowners less mobile. In fact, homeowners who have negative equity are slightly more likely to … move than homeowners who have positive equity. Ferreira, Gyourko and Tracy's (2010) contrasting result that negative equity … reduces mobility arises because they systematically drop some negative-equity homeowners' moves from the data …