Recessions associated with banking crises are deeper and longer than other recessions. While banking crises are often believed to reflect defects in regulation and supervision, regulatory and supervisory frameworks may also determine the shape of subsequent recoveries. Combining new databases...

We study the interactions of banks and firms within a leverage cycle to understand how capacity utilization and capital investment interact with funding costs, leverage by banks and firms, and liquidity. We show in a simulation study that when firms can grow and die by becoming insolvent, and...

The aim of this chapter is to map out the macroeconomic effects of a sustained debt-deflation within a small open economy. We build a 2 country stock flow consistent model, and show the effects of a debt-deflation cycle on households, firms, banks, the government, and the central bank in each...