The bond supply affects the yield curve through a wealth effect. We prove notably that a larger volume of titles shifts the level of the yield curve downward and increases its slope. Finally, credit constraints allow idiosyncratic and aggregate risks to interact and thus make interest rates more...

In this paper, we present a tractable model of time-varying precautionary saving behaviour due to changes in uninsured unemployment risk. In our model, agents facing incomplete markets and borrowing constraints respond to changes in labour market conditions by altering their buffer stock of...

This paper introduces incomplete insurance against idioyncratic labour income risk into an otherwise standard New Keynesian business cycle model with involuntary unemployment. Following an adverse monetary policy shock that lowers aggregate demand, job creation is discouraged and unemployment...