The primary objective of this paper is to study the interaction between monetary policy, asset prices, and the cost of capital. In particular, we explore this issue in a setting where individuals face idiosyncratic risk. Incomplete information also provides a transactions role for money so that...

The effects of monetary policy vary significantly across countries. In particular, recent empirical work finds evidence of a Tobin effect in high income countries and a reverse Tobin effect in less developed economies. We present a neoclassical growth model where money is required for investment...

In recent years, the industrial organization of the banking system has received a large amount of attention. In particular, it is generally viewed that the size distribution of the banking sector has changed where it is dominated by a small number of large institutions. In this paper, we develop...