The standard macro(prudential) models focus on externalities and treat all prudential instruments as alternative, but equivalent, forms of Pigouvian taxes. This paper explicitly models individual banks' risk choices and shows that different prudential instruments affect banks' risk-taking...

In this paper, we provide an overview of an emerging class of monotone map methods in analyzing distorted equilibrium in dynamic economies. In particular, we focus on proving the existence and characterization of competitive equilibrium in non-optimal versions of the optimal growth models. We...

In this paper, we provide an overview of an emerging class of monotone map methods in analyzing distorted equilibrium in dynamic economies. In particular, we focus on proving the existence and characterization of competitive equilibrium in non-optimal versions of the optimal growth models. We...

We prove the existence of a minimal state space recursive equilibrium (RE) for a broad class of infinite horizon dynamic general equilibrium models with positive externalities, dynamic complementarities, public policy, equilibrium indeterminacy and sunspots. These are new "multistep" monotone...

In this paper, we provide a set of sufficient conditions under which recursive competitive equilibrium exist and are unique for a large class of distorted dynamic equilibrium models with capital and elastic labor supply. We develop a monotone map approach to the problem. The class of economies...