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Collective Moral Hazard, Maturity Mismatch and Systemic Bailouts
The paper elicits a mechanism by which private leverage choices exhibit strategic complementarities through the reaction of monetary policy. When everyone engages in maturity transformation,
The Safety Trap
In this article, we provide a model of the macroeconomic implications of safe asset shortages. In particular, we discuss the emergence of a deflationary safety trap equilibrium with endogenous risk
Insurance and Taxation Over the Life Cycle
We consider a dynamic Mirrlees economy in a life cycle context and study the op- timal insurance arrangement. Individual productivity evolves as a Markov process and is private information. We use a
Bubbly Liquidity
This paper analyzes the possibility and the consequences of rational bubbles in a dy- namic economy where financially constrained firms demand and supply liquidity. Bub- bles are more likely to
Unconventional Fiscal Policy at the Zero Bound
When the zero lower bound on nominal interest rates binds, monetary policy cannot provide appropriate stimulus. We show that in the standard New Keynesian model, tax policy can deliver such stimulus
A Theory of Macroprudential Policies in the Presence of Nominal Rigidities
We propose a theory of monetary policy and macroprudential interventions in financial markets. We focus on economies with nominal rigidities in goods and labor markets and subject to constraints on
Productivity and Misallocation in General Equilibrium
We provide a general non-parametric formula for aggregating microeconomic shocks in general equilibrium economies with distortions such as taxes, markups, frictions to resource reallocation, and
Rare Disasters and Exchange Rates
We propose a new model of exchange rates, based on the hypothesis that the possibility of rare but extreme disasters is an important determinant of risk premia in asset markets. The probability of
The Macroeconomic Impact of Microeconomic Shocks: Beyond Hulten's Theorem
We provide a nonlinear characterization of the macroeconomic impact of microeconomic TFP shocks in terms of reduced-form non-parametric elasticities for efficient economies. We also provide the
Crisis and Commitment: Inflation Credibility and the Vulnerability to Sovereign Debt Crises
We explore the role of ination credibility in self-fullling debt crises. In particular, we propose a continuous time model of nominal debt with the potential for selffullling