We investigate the information content of aggregate stock market liquidity and askwhether it may be a useful realtime indicator, both for nancial stress, and real economicactivity in Norway. We describe the development in a set of liquidity proxies at the OsloStock Exchange (OSE) for the period...

This paper analyzes how agency problems in nancial contracting determine risk-taking andinvestment. In perfect capital markets a risk-neutral rm would invest until the expectedmarginal return equals the interest rate. However, as rms with little net-worth face agencycost in nancial contracting...

In monetary economics it is argued that due to agency cost in financial contracting a reduction of a firm's net worth will transmit into a decline of investment. This paper shows that the microeconomic foundation of this 'balance-sheet-channel' is dubious. Contrary to a common claim agency...

This paper investigates whether the inherent non-stationarity of macroeconomic time series is entirely due to a random walk or also to non-linear components. Applying the numerical tools of the analysis of dynamical systems to long time series for the US, we reject the hypothesis that these...

It is widely acknowledged that the recent generation of DSGE models failed to incorporate many of the liquidity and financial accelerator mechanisms revealed in the global financial crisis that began in 2007. This paper complements the papers presented at the 2009 BIS annual conference focused...

This paper is motivated by the lack of any obvious relationship betweenaggregate poverty and unemployment in Great Britain. We derive aframework based on individuals’ risks of unemployment and poverty,and how these vary over the economic cycle. Analysing the BritishHousehold Panel Survey for...

This paper explores the macroeconomic consequences of preferences displaying asubsistence point. It departs from the existing related literature by assuming thatsubsistence points are specific to each variety of goods rather than to the compositeconsumption good. We show that this simple feature...

This paper addresses the consumption–real exchange rate anomaly.International real business cycle models based on complete financialmarkets predict a unitary correlation between the realexchange rate and the ratio of home to foreign consumptionwhen subjected to supply-side shocks. In the data,...

In a financial system where balance sheets are continuously marked to market, asset price changes show up immediately in changes in net worth, and elicit responses from financial intermediaries, who adjust the size of their balance sheets. We document evidence that marked to market leverage is...