macroeconomic risk, investors reduce direct investment and hold more bank deposits. This ‘flight to quality’ leaves banks flush with …We examine how the banking sector may ignite the formation of asset price bubbles when there is access to abundant … liquidity. Inside banks, given lack of observability of effort, loan officers (or risk takers) are compensated based on the …

probability of disaster leads to a collapse of investment and a recession, an increase in risk spreads, and a decrease in the … shocks to aggregate uncertainty, I introduce a small, time-varying risk of economic disaster in a standard real business … risk of disaster does not affect the path of macroeconomic aggregates - a "separation theorem" between macroeconomic …

prices. An increase in the risk of disaster leads to a collapse of investment and a recession, with no current or future … risk premia has an important effect on investment and output …Most macroeconomic models fail to replicate the level, volatility, and countercyclicality of risk premia which has been …

probability of disaster leads to a collapse of investment and a recession, an increase in risk spreads, and a decrease in the … shocks to aggregate uncertainty, I introduce a small, time-varying risk of economic disaster in a standard real business … risk of disaster does not affect the path of macroeconomic aggregates - a "separation theorem" between macroeconomic …