We analyze the feedback mechanisms between economic downturns and financial stress for several euro area countries. Our study employs newly constructed financial condition indices that incorporate banking variables extensively. We apply a non-linear Vector Smooth Transition Autoregressive...

This is a chapter for the forthcoming book in West Publishing Company's Inside the Minds Series focusing on Financial Services Enforcement and Compliance (published by Aspatore Books). This chapter provides an overview of nature and current state of the markets for the equity side and debt...

We examine the safety of government bonds in the presence of Knightian uncertainty amongst financial market participants. In our model, the information insensitivity of government bonds is driven by strategic complementarities across counterparties and the structure of trading relationships. We...

Im Zuge der deutschen Wiedervereinigung wurden die formalen Institutionen in West- und Ostdeutschland schnell angeglichen. Dies galt insbesondere auch für die Kapitelmärkte. Nach Einrichtung eines Wertpapierdepots konnten nun auch Ostdeutsche risikobehaftete Wertpapiere unterschiedlichster Art...

This paper introduces endogenous preference evolution into a Lucas-type economy and explores its consequences for investors' trading strategy and the dynamics of asset prices. In equilibrium, investors herd and hold the same portfolio of risky assets which is biased toward stocks of sectors that...

This paper investigates private net saving in the US economy - divided into its principal components, households and (nonfinancial) corporate financial balances - and its impact on the GDP cycle from the 1980s to the present. Furthermore, we investigate whether the financial markets (stock...

We argue that the present crisis and stalling economy continuing since 2007 have clear origins, namely in the delusionary belief in the merits of policies based on a “perpetual money machine” type of thinking. Indeed, we document strong evidence that, since the early 1980s, consumption has...

This paper investigates private net saving in the US economy - divided into its principal components, households and (nonfinancial) corporate financial balances - and its impact on the GDP cycle from the 1980s to the present. Furthermore, we investigate whether the financial markets (stock...

We explore the short-run dynamics and long-run relationship between income and financial development in Algeria, Egypt, and Morocco. We use co-integration and VECM models and four indicators of financial development. The empirical results indicate that there is a long-run relationship between...

It is widely believed in the literature that inventory fluctuations are destabilizing to the economy. This paper re-assesses this view by developing an analytically-tractable general-equilibrium model of inventory dynamics based on a precautionary stockout-avoidance motive. The model's...