We examine the relationship between housing equity and wage earnings. We first provide a simple model of wage bargaining where failure leads to both job loss and mortgage default. Moreover, foreclosure generates disutility beyond selling a home. We test this prediction using nine waves of the...

In recent years, there has been increasing interest in understanding the determinants of income inequality across countries. There have also been concerns about the degree of concentration in the banking system on economic activity. Yet, there has not been any work which focuses on the level of...

Recently, central banks around the world have relied mostly on nontraditional policy tools to stimulate economic activity. A distinctive example is the expansion of the size of central bank balance sheets through the purchase of long-term government securities. In this paper we analyze the...

How do liquidity creation and financial fragility depend on the dual effects of increasing returns to scale and banking competition? We study this question in a model of financial intermediation with limited commitment. In the absence of scale economies, the degree of fragility is independent of...

Recently, central banks around the world have relied mostly on nontraditional policy tools to stimulate economic activity. A distinctive example is the expansion of the size of central bank balance sheets through the purchase of long-term government securities. In this paper we analyze the...