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Vulnerable Banks
Greenwood, Robin M. - 2012
When a bank experiences a negative shock to its equity, one way to return to target leverage is to sell assets. If …
Persistent link: https://www.econbiz.de/10013097784
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Financial Frictions and Firm Dynamics
Bergin, Paul R. - 2014
asset pricing implications of the firm entry condition to explain the equity price response to a financial shock. The model … endogenous capital restructuring. Also, allowing the number of firms to fall after an adverse financial shock is a useful margin … of macroeconomic adjustment, reducing the overall impact of the shock on aggregate output. This is because the remaining …
Persistent link: https://www.econbiz.de/10013054047
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Uncertainty Shocks, Asset Supply and Pricing Over the Business Cycle
Bianchi, Francesco - 2014
This paper estimates a business cycle model with endogenous financial asset supply and ambiguity averse investors. Firms' shareholders choose not only production and investment, but also capital structure and payout policy subject to financial frictions. An increase in uncertainty about profits...
Persistent link: https://www.econbiz.de/10013054525
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A Model of Secular Stagnation
Eggertsson, Gauti B. - 2014
without any self-correcting force to full employment. The trigger for the slump is a deleveraging shock, which creates an …
Persistent link: https://www.econbiz.de/10013045296
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Liquidity Flows and Fragility of Business Enterprises
den Haan, Wouter J.; Ramey, Garey; Watson, Joel - 2022
This paper considers the efficiency of financial intermediation and the propagation of business cycle shocks in a model of long-term relationships between entrepreneurs and lenders lenders may be constrained in their short-run access to liquidity. When liquidity is low, relationships are subject...
Persistent link: https://www.econbiz.de/10013324127
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Capital Flows, Cross-Border Banking and Global Liquidity
Bruno, Valentina - 2013
We investigate global factors associated with cross-border capital flows. We formulate a model of gross capital flows through the international banking system and derive a closed form solution that highlights the leverage cycle of global banks as being a prime determinant of the transmission of...
Persistent link: https://www.econbiz.de/10013082151
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Does the Lack of Financial Stability Impair the Transmission of Monetary Policy?
Acharya, Viral V. - 2019
We investigate the transmission of central bank liquidity to bank deposits and loan spreads in Europe over the period from January 2006 to June 2010. We find evidence consistent with an impaired transmission channel due to bank risk. Central bank liquidity does not translate into lower loan...
Persistent link: https://www.econbiz.de/10012858814
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Inspecting the Mechanism : Leverage and the Great Recession in the Eurozone
Martin, Philippe - 2014
We provide a comprehensive account of the dynamics of eurozone countries from 2000 to 2012. We analyze private leverage, fiscal policy, labor costs and interest rates and we propose a strategy to separate the impact of credit cycles, excessive government spending, and sudden stops. We then ask...
Persistent link: https://www.econbiz.de/10013045645
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Dynamic Debt Deleveraging and Optimal Monetary Policy
Benigno, Pierpaolo - 2014
This paper studies optimal monetary policy under dynamic debt deleveraging once the zero bound is binding. Unlike the existing literature, the natural rate of interest is endogenous and depends on macroeconomic policy. Optimal monetary policy successfully raises the natural rate of interest by...
Persistent link: https://www.econbiz.de/10013046160
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Financial Structure, Macroeconomic Stability and Monetary Policy
Cecchetti, Stephen G.; Krause, Stefan - 2021
Over the past twenty years, macroeconomic performance has improved markedly in industrialized and developing countries alike. Both inflation and real growth are more stable now than they were in the 1980s. This stability has been accompanied by dramatic changes in financial structure. We examine...
Persistent link: https://www.econbiz.de/10013230583