We simulate interbank lending. Each bank faces fluctuations in deposits and stochastic investment opportunities which mature with delay. This creates the risk of liquidity shortages. An interbank market lets participants pool this risk but also creates the potential for one bank's crisis to...

A monetary-search model with match specific preferences and traded quantities is analyzed to assess how aggregate output, the price level, and the velocity of money are affected by various forms of technological change. Changes in the productive technology lead to output and prices moving in...

This paper continues the study of endogenous fiscal policy, using a framework where both capital taxes and government spending are determined optimally. The paper examines the interaction between private investors and fiscal authorities. It specifies the circumstances under which public debt...

An interbank market lets participants pool the risk arising from the combination of illiquid investments and random withdrawals by depositors. But it also creates the potential for one bank's failure to trigger off avalanches of further failures. We simulate a model of interbank lending to study...

We study an overlapping generations economy in which environmental degradation results from economic activity and affects agents' uncertain lifetimes. Life expectancy depends positively on economic activity and negatively on the stock of pollution. This can make the growth-survival relationship...