In this paper we test for large deviations in headline measures of the price level relative to core measures using the recently proposed test of Phillips et al. (2011a). We find evidence of explosive behaviour in the headline price index of personal consumption expenditures (PCE) relative to the...

We show the importance of endogenous oil prices and production in the real business cycle framework. Endogenising these variables improves the model's predictions of business cycle statistics, oil related and non-oil related, relative to a situation where either is exogenous. This result is...

In our view, the financial crisis was largely due to wrong incentives affecting the behavior of financial institutions and investors that was set in motion by our government's reluctance to let large financial institutions fail – i.e., the Too Big to Fail (hereafter, TBTF) policy. Also...

This study reviews the causes and evolution of the financial crisis and surveys some of the recent literature on this topic. It documents how bank regulation became essentially ineffective due to the rise of “quasi-banks,” that is, large financial intermediaries that perform banking...

We study a monetary, general equilibrium economy in which banks exist because they provide intertemporal insurance to risk-averse depositors. A ""banking crisis"" is defined as a case in which banks exhaust their reserve assets. Under different model specifications, the banking industry is...