We study a business cycle with a Translog production function. We empirically identify a complementarity between labor and energy that leads to "procyclical" returns to scale, which is not compatible with the tightly parameterized production functions commonly used in the literature...

The paper follows Gilchrist and Zakrajsek (2012) (henceforth GZ) in examining the evidence on the relationship between the bond market credit spreads (pricing), and financial intermediation as is reflected in banking conducts and the real business cycles. We use an extensive data set of prices...

In this paper we provide a model of the macroeconomic implications of safe asset shortages. In particular, we discuss the emergence of a deflationary safety trap equilibrium with endogenous risk premia. It is an acute form of a liquidity trap, in which the shortage of a specific form of assets,...

Intangible capital is an important factor of production in modern economies that is generally neglected in business cycle analyses. We demonstrate that intangible capital can have a substantial impact on business cycle dynamics, especially if the intangible is complementary with production...

Intangible capital is an important factor of production in modern economies that is generally neglected in business cycle analyses. We demonstrate that intangible capital can have a substantial impact on business cycle dynamics, especially if the intangible is complementary with production...

Emerging economies have high shares of self-employed individuals running owner-only firms who, in contrast to many salaried firms, have little access to formal financing and therefore rely on informal financing (input credit) from other firms. We build a small open economy real business cycle...

Macroeconomists have emphasized the force of facts in forging a consensus understanding of business cycle fluctuations. According to this view, rival economists could not longer hold disparate views on the topic because "facts have a way of not going away" (Blanchard 2009). But how can...

We enrich workhorse macroeconomic models with a mechanism that proxies strategic uncertainty and that manifests itself as waves of optimism and pessimism about the short-term economic outlook. We interpret this mechanism as variation in confidence and show that it helps account for many salient...