sentiment shock that drives the movements of bubbles and is transmitted to the real economy through endogenous credit …We present an estimated dynamic stochastic general equilibrium model of stock market bubbles and business cycles using … Bayesian methods. Bubbles emerge through a positive feedback loop mechanism supported by self-fulfilling beliefs. We identify a …

, we offer new empirical evidence that credit declines during a recession primarily because of the reduction in the net … the bank credit market). Along the macroeconomic dimension of these gross flows, we document four cyclical facts. First …, the volatility of borrower inflows is two times as large as the volatility of obligors exiting from the credit market …

euro area as a whole and in its five largest countries. In a Bayesian VAR framework, the two credit supply shocks are … for business cycles. For the euro area, the explanatory power of the two credit supply shocks for GDP growth variations is …

rates, output, asset prices and credit in the US. We find close linkages amongst cyclical fluctuations in the variables. …

This paper suggests that non-fundamental component in asset prices is one of the drivers of financial and credit cycle … that loose monetary policy induces loose credit conditions and leads to a rise in both fundamental and nonfundamental …, lending rate and default rate decreases. These effects reverse after several quarters, inducing a credit crunch. The credit …

How do housing bubbles affect other economic sectors? We show that in the presence of collateral constraints, a bubble … initially raises housing credit demand and crowds out credit to non-housing firms. If the bubble lasts, however, housing credit … repayments raise banks' net worth and expand credit supply, so that crowding-out eventually gives way to crowding-in. This is …

constraints, a housing bubble initially raises credit demand by housing firms while leaving credit supply unaffected. It therefore … crowds out credit to non-housing firms. If time passes and the bubble lasts, however, housing firms eventually pay back their … higher loans. This leads to an increase in banks' net worth and thus to an expansion in their supply of credit to all firms …