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The Great Financial Crisis of 2007-09 confirmed the vital importance of advancing our understanding of macrofinancial linkages, the two-way interactions between the real economy and the financial sector. The crisis was a bitter reminder of how sharp fluctuations in asset prices, credit and...
Persistent link: https://www.econbiz.de/10012929483
The goal of this paper is to show that household-level financial distress (FD) varies greatly, meaning there is unequal exposure to macroeconomic risk, and that FD can increase macroeconomic vulnerability. To do this, we first establish three facts: (i) regions in the U.S. vary significantly in...
Persistent link: https://www.econbiz.de/10013322291
The financial crisis has highlighted the need for models that can identify counterparty risk exposures and shock transmission processes at the systemic level. We use the euro area financial accounts (flow of funds) data to construct a sector-level network of bilateral balance sheet exposures and...
Persistent link: https://www.econbiz.de/10003969268
A growing literature suggests that 'financialization' may weaken the performance of non-financial corporations and constrain the growth of aggregate demand. This paper evaluates (some of) the claims that have been made using two alternative approaches (one derived from Skott (1981, 1988, 1989)...
Persistent link: https://www.econbiz.de/10003733935
Is the observed large increase in consumer indebtedness since the 1980s beneficial for U.S. consumers? This paper quantitatively studies the macroeconomic and welfare implications of relaxing borrowing constraints when consumers exhibit a hyperbolic discounting preference. The model can capture...
Persistent link: https://www.econbiz.de/10013134315
This paper examines how the the distributive impact of macroeconomic shocks is shaped by selected institutions. It uses a dynamic stochastic general equilibrium (DSGE) framework with heterogeneous agents and an endogenous collateral constraint. The model is based on the “credit view” of...
Persistent link: https://www.econbiz.de/10013102240
The effect of wealth on consumption is an issue of longstanding interest to economists. Conventional wisdom suggests that fluctuations in household wealth have driven major swings in economic activity. This article considers so-called consumption wealth effects. There is an extensive existing...
Persistent link: https://www.econbiz.de/10013076582
The financial crisis has highlighted the need for models that can identify counter-party risk exposures and shock transmission processes at the systemic level. We use the euro area financial accounts (flow of funds) data to construct a sector-level network of bilateral balance sheet exposures...
Persistent link: https://www.econbiz.de/10013153431
We investigate the role and impact of household debt on the economic performance of the European economy during the double-dip recession of 2008-2013. We use a loan-level data set of millions of residential mortgages originated between 2000 and 2013 to calculate regional indicators of household...
Persistent link: https://www.econbiz.de/10012824168
We estimate the macroeconomic effects of changes in loan-to-value limits using an approach that involves the cross-sectional loan-to-value distribution and does not require that a limit is actually in place. We show that the effects are asymmetric and non-linear as tighter limits constrain a...
Persistent link: https://www.econbiz.de/10012870568