The U.S. Federal Reserve responded to the great recession by reducing policy rates to the effective lower bound. In order to provide further monetary stimulus, they subsequently conducted large-scale asset purchases, quadrupling their balance sheet in the process. We assess the international...

We highlight that a broad class of DSGE models with housing and collateralized borrowing predict a fall in both house prices and consumption following positive government spending shocks. By contrast, we show that house prices and consumption in the U.S. rise persistently after identified...

Consumption falls counter-factually on impact for investment-specific technology shocks, which, recent literature suggests, are important drivers of business cycles. Introducing financial frictions and variable capacity utilization to the standard New-Keynesian setup can overturn this...