After the collapse of housing markets during the Great Depression, the U.S.
government played a large role in shaping the future of housing finance and policy.
Soon thereafter, housing markets witnessed the largest boom in recent history.
We use a dynamic stochastic general equilibrium model to address two questions about
U.S. monetary policy: 1) Can monetary policy elevate output when it is below potential? and 2) Is
the zero lower bound a trap?
Through a purely positive lens, we study and document the growing trend of mortgagors who skip mortgage payments as an extra source of "informal" unemployment insurance during the 2007 recession and the subsequent recovery.
Financial capital and fixed capital tend to flow in opposite directions between poor and
rich countries. Why? What are the implications of such two-way capital flows for global trade
imbalances and welfare in the long run? This paper introduces frictions into a standard two-
country neoclassical growth model to explain the pattern of two-way capital flows between
emerging economies (such as China) and the developed world (such as the United States).
The Federal Open Market Committee has recently attempted to stimulate economic growth using unconventional methods. Prominent among these is quantitative easing (QE)—the purchase of a large quantity of longer-term debt on the assumption that QE reduces long-term yields through the portfolio balance channel.
Factor models have become useful tools for studying international business cycles. Block
factor models [e.g., Kose, Otrok, and Whiteman (2003)] can be especially useful as the zero
restrictions on the loadings of some factors may provide some economic interpretation of the
A large literature studies the information contained in national-level economic indicators, such as financial and aggregate economic activity variables, for forecasting U.S. business cycle phases (expansions and recessions.)
We adopt a statistical approach to identify the shocks that explain most of the
fluctuations of the slope of the term structure of interest rates. We find that one single
shock can explain the majority of all unpredictable movements in the slope over
a 10-year forecast horizon.
In this paper we show that price equalization alone is not sufficient to establish that
there are no barriers to international trade. There are many barrier combinations that
deliver price equalization, but each combination implies a different volume of trade.
This study proposes that heterogeneous household portfolio choices within a country and
across countries offer an explanation for global imbalances. We construct a stochastic growth
multi-country model in which heterogeneous agents face the following restrictions on asset
This paper proposes a model of international trade with capital accumulation and financial intermediation. This is achieved by embedding the Melitz (2003) model into an incomplete-markets neoclassical framework with an endogenous credit market.
This paper examines a topic of increasing interest, the potential determinants of extensive (i.e., number of firms) and intensive (i.e., average exports per firm) trade margins, using state-level trade to 190 countries. In addition to distance and country size, other factors affecting trade costs and export demand are explored.
This paper studies loan activity in a context where banks must follow Basel Accord-type rules and acquire financing from households. Loan activity typically decreases when entrepreneurs’ investment returns decline, and we study which type of policy could revigorate an economy in a trough.
Forecasting is a daunting challenge for business economists and policymakers, often made more difficult by pervasive uncertainty. No such uncertainty is more difficult than projecting the reaction of policymakers to major shifts in the economy.
This paper introduces a measure of credit score performance that abstracts from the influence of "situational factors." Using this measure, we study the role and effectiveness of credit scoring that underlied subprime securities during the mortgage boom of 2000-2006.
In this paper we provide estimates of the coefficient of relative risk aversion
using information on self-reports of subjective personal well-being from three datasets:
the Gallup World Poll, the European Social Survey, and the World Values Survey.
We study the contraction of foreign direct investment (FDI) flows in the United States during the recent financial crisis and show their unusual non-resiliency, which depends in part on the global nature of the economic recession, but also on the increases in the cost of financing FDI in the economies in which the flows originate.