This paper uses state-level data to estimate the effect of federal defense spending shocks on state real activity. We find moderately strong evidence that for the average state the fiscal multiplier is larger during recessions. However, there is substantial heterogeneity across the...

This paper provides an empirical assessment of the power of forward guidance at different horizons, shedding new light on the strength of the "forward guidance puzzle". Our identification strategy allows us to disentangle the change in future interest rates stemming from deviations from the...

This paper compares responses to monetary shocks in the EMU countries (in the pre-EMU sample) and in the New Member States (NMS) from Central Europe. The small-sample problem, especially acute for the NMS, is mitigated by using a Bayesian estimation procedure which combines information across...

Dornbusch's exchange rate overshooting hypothesis is a central building block in international macroeconomics. Yet, empirical studies of monetary policy have typically found exchange rate effects that are inconsistent with overshooting. This puzzling result has been viewed by some researchers as...

This paper investigates the responses of house prices and household credit to monetary policy shocks in Norway, using Bayesian structural VAR models. I find that the effect of a monetary policy shock on house prices is large, while the effect on household credit is muted. This is consistent with...

We show that the contemporaneous and longer horizon impulse responses estimated using small-scale Proxy structural vector autoregressions (SVARs) can be severely biased in the presence of information insufficiency. Instead, we recommend the use of a Proxy Factor Augmented VAR (FAVAR) model that...

Do behavioral biases a affect prices in a high-stake market? We study the role of left digit bias in the purchase of an apartment, one of the most important assets in a household's portfolio. Left-digit bias is the inability to fully process digits after the first, perceiving prices just below a...

The relevant economic literature frequently focuses on the impact of credit shocks on housing prices. The doctrine of the New Consensus Macroeconomics completely ignores bank credit. The Great Recession, however, has highlighted the significance of bank credit. The purpose of this contribution...

Recent episodes of housing bubbles, which occurred in several economies after the burst of the United States housing market, suggest studying the evolution of housing prices from a global perspective. We utilize a theoretical model for the purposes of this contribution, which identifies the main...

While aggregate house price indices display time persistence, less is known about micro persistence. This article proposes that absence of micro persistence implies that an excessively high or low sell price in one transaction is not repeated in the next transaction. We exploit a unique...