Financial innovations are a common explanation of the rise in consumer credit and bankruptcies. To evaluate this story, we develop a simple model that incorporates two key frictions: asymmetric information about borrowers' risk of default and a fixed cost to create each contract offered by...

We construct a unique panel of retail food prices in 69 Canadian and 51 U.S. cities during the Interwar (1920-40) period. Surprisingly, we find that average relative price dispersion across cities within Canada and the U.S., and the role of distance in accounting for cross-city price...

There are large countercyclical fluctuations in U.S. bankruptcy filings and real credit card interest rates, while unsecured credit is pro-cyclical. This paper documents the facts and asks whether the predictions of incomplete market models with bankruptcy are consistent with these facts. We...

This paper investigates the effect of private pensions on the retirement wealth distribution. We incorporate stochastic private pension coverage into a calibrated life-cycle model with stochastic earnings. Private pensions lead to higher net worth inequality at retirement, which is closer to the...

Banks have historically provided mutual insurance against asset risk, where the insurance arrangement itself was characterized by limited enforcement. This paper shows that a non-trivial interaction between asset and liquidity risk plays a crucial role in shaping optimal banking arrangements in...

Housing markets in the United States and Canada are similar in many respects, but each has fared quite differently since the onset of the financial crisis. A comparison of the two markets suggests that relaxed lending standards likely played a critical role in the U.S. housing bust.

We propose a mechanism via which a decline in the share of young workers slows employment growth in expanding sectors, and exacerbates sectoral reallocation costs. To quantify this mechanism, we develop a search model with perpetual youth, three sectors and endogenous separations of worker-firm...

Inflation can affect both the dispersion of commodity-specific price levels across locations (relative price variability, RPV) and the dispersion of inflation rates (relative inflation variability, RIV). Some menu-cost models and models of consumer search suggest that the RIV-inflation...

Globally, wealth is very unequally distributed, both within countries and between countries. The UNUWIDER project on Personal Assets from a Global Perspective has found for instance that the richest 10 percent of adults in the world own 85 percent of global household wealth. Of these...

For most of 2011-19, inflation in Canada and advanced economies registered below inflation targets. This has spurred a debate on whether "lowflation" is a temporary phenomenon or rather a sign of a fundamental change in inflation behaviour-in Canada and globally. So far, we know little. Global...