This paper studies cross-sector comovement, one of the defining characteristics of the business cycle, in a monetary framework. We argue that monetary factors might be important for understanding this phenomenon through a working capital channel. We show that in a sticky portfolio adjustment...

We developed a two-sector general equilibrium model with money and credit to study cross-sector comovement over the business cycle. Through a working capital channel, both money and productivity shocks can generate procyclicality of sectoral activities and positive cross-sector correlations of...

We analyze how the presence of distribution services affects an economy's long-run growth. We show that in an endogenous growth model, increases in the unit distribution requirement lower the economy''s balanced growth rate by reducing the proportion of aggregate employment allocated to the...

We analyze how the presence of distribution services affects an economy's long-run growth. We show that in an endogenous growth model, increases in the unit distribution requirement lower the economy''s balanced growth rate by reducing the proportion of aggregate employment allocated to the...

This paper studies empirically the dynamic interactions between asset prices, monetary policy, and aggregate fluctuations during the Volcker-Greenspan period. Using a simple structural vector autoregression framework, we investigate the effects of monetary policy on output, inflation and asset...

This paper develops a model of banking frictions and banking riskiness, the importance of which is highlighted by the recent Global Financial Crisis (GFC). We propose a model-based approach to decompose the effect of a banking riskiness shock into a pure default effect and a risk effect when...

This paper develops a model of banking frictions and banking risk. As a sort of systemic risk, changes in banking risk lead to fluctuations in aggregate economic activity. We decompose the macroeconomic effect of a banking risk shock into a pure default effect and a risk-aversion effect when...