Using a new monthly dataset on bank-level lending rates, we study the transmission of conventional and unconventional monetary policy in the euro area via shifts in the supply of credit. We find that a bank lending channel is operational for both types of measures, though its functioning...

The recent financial crises pointed out the central role of public and private debt in modern economies. However, even if debt is a recurring topic in discussions about the current economic situation, economic modelling does not take into account debt as one of the crucial determinants of...

The recent financial crises pointed out the central role of public and private debt in modern economies. However, even if debt is a recurring topic in discussions about the current economic situation, economic modeling does not take into account debt as one of the crucial determinants of...

Using firm-level data from surveys and financial statements, this paper presents an analysis of credit standards, capital allocation and financial conditions of non-financial enterprises in Denmark since the beginning of the financial crisis. The analysis indicates that low interest rates and...

This paper presents a small macroeconomic model describing the main mechanisms of the process of credit creation by the private banking system. The model is composed of a core unit - where the dynamics of income, credit, and aggregate demand are determined - and a set of sectoral accounts that...

I add a moral hazard problem between banks and depositors as in Gertler and Karadi (2009) to a DSGE model with a costly state verification problem between entrepreneurs and banks as in Bernanke et al. (1999) (BGG). This modification amplifies the response of the external finance premium and the...

Shocks to bank lending, risk-taking and securitization activities that are orthogonal to real economy and monetary policy innovations account for more than 30 percent of U.S. output variation. The dynamic effects, however, depend on the type of shock. Expansionary securitization shocks lead to a...

In a paper for the Review of Keynesian Economics, Steve Keen recently provided a restatement of his claim that "effective demand equals income plus the change in debt". The aim of the present article is to provide a detailed critique of Keen's argument using an analytical framework pioneered by...

In this study, we use an industrial-organization model of the banking industry with money creation to examine the effect of conventional and unconventional monetary policy on the money stock. We consider quantitative monetary easing, qualitative monetary easing, and a negative interest rate on...

This paper investigates the heterogeneous impact of monetary policy shocks on financial intermediaries. I distinguish between banks and shadow banks based on their funding constraints. Because credit creation by banks responds to economy-wide productivity endogenously, bank reaction to shocks...