This paper examines how the materialization of credit defaults affects the real economy. I estimate a DSGE model … including banks, firms and financial frictions using euro area data. The estimation results show that a positive credit default … shock, which is identified as an unanticipated increase in credit default losses, complicates monetary policy because output …

-constrained investors to take excessive risks. Ignored are unconstrained investors speculating on higher prices during credit booms. To … a bank/brokerage-credit-fueled stock-market bubble. The direct effect is a 25 cent increase in a stock's market …

This paper studies episodes in which aggregate bank credit contracts alongside expanding economic activity-credit …--on average, they occur every five years. By comparison, banking crises take place every eight years on average. Credit reversals …

of lenders not observing a borrower's true credit score but only seeing an aggregate credit category. We find that … borrower's credit score. This inference is economically significant and allows lenders to lend at a 140-basis-points lower rate … for borrowers with (unobserved to lenders) better credit scores within a credit category. While lenders infer the most …

Standard economic theory says that unsecured, high-interest, short-term debt -- such as borrowing via credit cards and … transitory income shock of unemployment. Instead, individuals smooth their credit card debt and overdrafts by adjusting … consumption. We first use detailed longitudinal information on debit and credit card transactions, account balances, and credit …

-constrained investors to take excessive risks. Ignored are unconstrained investors speculating on higher prices during credit booms. To … encouraged a bank/brokerage-credit-fueled stock-market bubble. The direct effect is a 25 cent increase in a stock's market …