This paper analyzes the under-investigated relationship uniting financial development and income distribution. We use a novel approach taking into account for the first time the specific channels linking banks, capital markets and income inequality, the time-varying nature of the relationship,...

This paper evaluates the domestic and international impacts of lowering short-term interest rates and increasing budget spending on several indicators of liquidity, volatility, credit and economic activity. Data from the 2003-2011 period in the United States, the euro zone and Canada were used...

Financial markets are known for overreacting to public information. Central banks can reduce this overreaction either by disclosing information to a fraction of market participants only (partial publicity) or by disclosing information to all participants but with ambiguity (partial...

This paper argues that financial links between agents may lead to the resilience or to the contagion of financial distress. Our model details the real effects of agents' beliefs on the resilience of the economy. When the economy is connected enough, it is subject to an unstable equilibrium. Our...