Over the past 15 years there has been remarkable progress in the specification and estimation of dynamic stochastic general equilibrium (DSGE) models. Central banks in developed and emerging market economies have become increasingly interested in their usefulness for policy analysis and...

The unfolding financial turmoil in mature economies has prompted the official and private sectors to reconsider policies, business models and risk management practices. Regardless of its future evolution, it already threatens to become one of the defining economic moments of the 21st century....

We consider a general equilibrium model with frictions in credit markets used by households. Inour economy, houses provide housing services to consumers and serve as collateral to lower borrowingcost.We show that this amplifies and propagates the effect of monetary policy shocks on...

This paper examines monetary policy in a currency union whose member countries exhibitheterogeneous rates of limited asset markets participation (LAMP). As a result risksharing among member countries is imperfect and the monetary transmission mechanismcan dier across countries. In the limit the...

How can globalization affect the optimal choice of monetary policy strategy during asset price booms in a small open economy? Globalization can have an impact on both the supply and the demand side of the economy. Focusing on the supply side of globalization, it has been shown that a flattening...

By simplifying the computational tasks and by providing step-by-step explana-tions of the procedures required to study a linear dynamic rational expectations(LDRE) model, this paper and the accompanying \LDRE Toolbox" of Matalb func-tions guide a researcher with almost no experience in...

This paper constructs a two-country stochastic growth model in which neutraland investment-specic technology shocks are nonstationary but cointegrated acrosseconomies. It uses this model to interpret data showing that while real investmenthas grown faster than real consumption in the United...

This paper analyzes the impact of limited enforceable international loanson international risk sharing and trade fluctuations in a two-country two-good endowment economy. Our specification of the punishment threat allowsthe exclusion from trade to last only finitely many periods and...

This paper analyzes the evolution of the degree of global cyclicalinterdependence over the period 1960-2005. We categorize the 106 countries in oursample into three groups—industrial countries, emerging markets, and other developingeconomies. Using a dynamic factor model, we then decompose...

This paper proposes a theoretical framework to analyze the impacts of credit and technologyshocks on business cycle dynamics, where firms rely on banks and households for capitalfinancing. Firms are identical ex ante but differ ex post due to different realizations of firmspecific technology...