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The Financial Accelerator in a Quantitative Business Cycle Framework
This paper develops a dynamic general equilibrium model that is intended to help clarify the role of credit market frictions in business fluctuations, from both a qualitative and a quantitative
Agency Costs, Net Worth, and Business Fluctuations
This paper develops a simple neoclassical model of the business cycle in which the condition of borrowers' balance sheets is a source of output dynamics. The mechanism is that higher borrower net
Inside the Black Box: The Credit Channel of Monetary Policy Transmission
The 'credit channel' theory of monetary policy transmission holds that informational frictions in credit markets worsen during tight- money periods. The resulting increase in the external finance
The Federal Funds Rate and the Channels of Monetary Transnission
First, we show that the interest rate on Federal funds is extremely informative about future movements of real macroeconomic variables, more so than monetary aggregates or other interest rates. Next,
Measuring the Effects of Monetary Policy: A Factor-Augmented Vector Autoregressive (FAVAR) Approach
Structural vector autoregressions (VARs) are widely used to trace out the effect of monetary policy innovations on the economy. However, the sparse information sets typically used in these empirical
Non-Monetary Effects of the Financial Crisis in the Propagation of the Great Depression
This paper examines the effects of the financial crisis of the 1930s onthe path of aggregate output during that period. Our approach is complementary to that of Friedman and Schwartz, who emphasized
Credit, Money, and Aggregate Demand
Standard models of aggregate demand treat money and credit asymmetrically; money is given a special status, while loans, bonds, and other debt instruments are lumped together in a "bond market" and
Measuring Monetary Policy
Extending the approach of Bernanke and Blinder (1992), Strongin (1992), and Christiano, Eichenbaum, and Evans (1994a, 1994b), we develop and apply a VAR-based methodology for measuring the stance of
The global saving glut and the U.S. current account deficit
a speech at the Sandridge Lecture, Virginia Association of Economics, Richmond, Virginia, March 10, 2005 and the Homer Jones Lecture, St. Louis, Missouri, on April 14, 2005
What Explains the Stock Market&Apos;S Reaction to Federal Reserve Policy?
This paper analyzes the impact of unanticipated changes in the federal funds rate target on equity prices, with the aim of both estimating the size of the typical reaction and understanding the