Both the Great Depression and the Great Recession followed systemic banking crises and preceded unusually weak and slow recoveries. The prior literature has identified monetary, household demand, and credit effects as contributors to the severe and prolonged downturns. This paper studies a...

This paper explores the transmission of non-capital shocks through banking networks. We develop a methodology to construct non-capital (idiosyncratic) shocks, using labor productivity shocks to large firms. We document a change in the relationship between foreign idiosyncratic shocks and...

The Great Recession has been characterised by the two stylized facts: the buildup of leverage in the household sector in the period preceding the recession and a protracted economic recovery that followed. We attempt to explain these two facts as an information friction, whereby agents are...