This paper studies the recessionary effects of sovereign default risk using firm-level data and a model of sovereign debt with firm heterogeneity. Our environment features a two-way feedback loop. Low output decreases the tax revenues of the government and raises the risk that it will default on...

We study how relationship lending and transaction lending vary over the business cycle. We develop a model in which relationship banks gather information on their borrowers, which allows them to provide loans for profitable firms during a crisis. Due to the services they provide, operating costs...

Our purpose in this paper is to present a class of convex endogenous growth models, and to analyze their performance in terms of both growth and business cycle criteria. The models we study have close analogs in the real business cycle literature. In fact, we interpret the exogenous growth rate...

This work explores how Argentina overcame the Great Depression and asks whether active macroeconomic interventions made any contribution to the recovery. In particular, we study Argentine macroeconomic policy as it deviated from gold-standard orthodoxy after the final suspension of...

Is the long-term trend of the economy -- growth -- substantially influenced by the short-term movements -- business cycles -- and, if so, how? Are business cycles subject to major secular changes? Are these fluctuations the natural way growth takes in private enterprise economies or are they...

When Roosevelt abandoned the gold standard in April 1933, he converted what had been effectively real government debt into nominal government debt to open the door to unbacked fiscal expansion. We argue that he followed a state-contingent fiscal rule that ran nominal-debt-financed primary...

Economists use micro-based and macro-based approaches to assess the effects of health on economic growth. The micro-based approach tends to find smaller effects than the macro-based approach, thus presenting a micro-macro puzzle regarding the economic return on health. We reconcile these two...

It is a remarkable fact about the historical US business cycle that, after unemployment reached its peak in a recession, and a recovery began, the annual reduction in the unemployment rate was stable at around 0.55 percentage points per year. The economy seems to have had an irresistible force...

The U.S. economic expansion since 2009 is the longest on record since 1854, according to the National Bureau of Economic Research Business Cycle Dating Committee. This paper seeks to understand this phenomenon better by looking at the time paths of popular narratives over this interval, of...

Because positive spillovers give investment in innovation a social rate of return several times higher than its internal rate of return to innovators, innovation is chronically underfunded. Recurrent manias, panics and crashes in stock markets inundate "hot" new technologies with capital. To the...