This paper studies the effects of FOMC forward guidance. We begin by using high frequency identification and direct measures of FOMC private information to show that puzzling responses of private sector forecasts to movements in federal funds futures rates on FOMC announcement days can be...

This paper examines the relationship between adverse shocks to the banking system and their effect on the general economy in Europe. This topic was brought to the spotlight during the 2007-2009 financial and economic crisis, when the relatively healthy, at that time, European economy was...

Spain has experienced many financial crises through its history. These financial crises have varied origins. However, they do have common threads. The current recession and subsequent debt crisis follow the same pattern. The fiscal and monetary policies of the Spanish government have played a...

Economic output may drop for reasons related with supply, such as a fall in the number of the employed factors of production or increases in real costs; and for reasons related with demand, such as an increase in non-productive market power or a fall in aggregate demand, the worst type of...

In this paper, we first document the important role played by real estate investors in the recent housing cycle using mortgage loan level data. We show that the fraction of mortgage applications as well as originations that are for investment homes led both the boom and the bust. Additionally,...

Somebody must step up. Somebody must call out the stabilization irrelevance of the American Economic Association's signature macro journal, American Economic Journal: Macroeconomics. The on-going failure of the nine-year-old journal is most egregiously illustrated by its treatment of the Great...

We implement a new approach for the identification of news shocks about future technology. In a VAR featuring a measure of aggregate technology and several forward-looking variables, we identify the news shock as the shock orthogonal to technology innovations that best explains future variation...

We show that household leverage is an early and powerful predictor of the 2007 to 2009 recession. Counties in the U.S. that experienced a large increase in household leverage from 2002 to 2006 showed a sharp relative decline in durable consumption starting in the third quarter of 2006 – a full...

Safe asset shortages can expose the economy to liquidity traps. The nature of these traps is determined by the cyclicality of the bond premium. Self-fulfilling liquidity traps are associated with a counter-cyclical bond premium. Small issuances of government debt crowd out private debt and...