The recent Great Recession has renewed interest in the role of financial markets and credit in the economy, as well as in the boundaries of monetary, macroprudential and fiscal policies that impact macroeconomic developments and may influence business cycles. In the first two chapters of this...

We develop a theory of financial intermediary leverage cycles in the context of a dynamic model of the macroeconomy. The interaction between a production sector, a financial intermediation sector, and a household sector gives rise to amplification of fundamental shocks that affect real economic...

Since the financial crisis of 2007-2009, policymakers have debated the need for a new toolkit of cyclical "macroprudential" policies to constrain the build-up of risks in financial markets, for example, by dampening credit-fueled asset bubbles. These discussions tend to ignore America's long and...

Business cycles are costlier and stabilization policies more beneficial than widely thought. This paper shows that all business cycles are asymmetric and resemble mini "disasters." By this we mean that growth is pervasively fat-tailed and non-Gaussian. Using long-run historical data, we show...