The book uses the methods of spectral analysis to establish a set of stylized facts concerning the cyclical properties of the most important economic aggregates of Germany and the US. To explain these stylized facts, a series of investment cycle models is developed and evaluated. Thereby, the...

Long-term debt contracts transfer aggregate risk from borrowing firms to lending banks. When aggregate shocks increase the future default probability of firms, banks are not compensated for the rising default risk of existing contracts. If banks are highly leveraged, this can lead to financial...

Most US credit card holders revolve high-interest debt, often with substantial liquid and retirement assets. We model separation of accounting from shopping allowed by credit cards, in a rational, dynamic game. When the shopper is more impatient than the accountant, selling assets to repay debt...

Existing models of equilibrium unemployment with endogenous labor market participation are complex, generate procyclical unemployment rates and cannot match unemployment variability relative to GDP. We embed endogenous participation in a simple, tractable job market matching model, show...

The paper analyzes a heterogeneous agents macro model in which large fortunes are created through entrepreneurial behavior. Special attention is given to the saving behavior of the very wealthy families. It is a prominent puzzle in consumption theory that the very rich save more than what one...