The responsiveness of job creation to shocks is procyclical, while the destruction countercyclical. This new finding can be explained by a heterogeneous-firm model in which hiring costs lead lumpy employment adjustment. predicts that policies aim stimulate encouraging creation, such as subsidies, are significantly less effective recessions: these times when few firms near their thresholds and m...

Business credit lags GDP growth by about one year. This contributes to high leverage during recessions and slow deleveraging. We show that a model in which firms use risky long-term debt replicates this adjustment of firm debt. In the model, slow-moving has important effects for real activity. High levels issued expansions are only gradually reduced recessions. generates an adverse feedback loo...

After the Great Recession several central banks started setting negative nominal interest rates in an expansionary attempt, but effectiveness of this measure remains unclear. Negative can stimulate economy by lowering that commercial charge on loans, they also erode bank profitability squeezing deposit spreads. This paper studies effects a new DSGE model where intermediate transmission monetary...

We document that the expectations of households, firms, and professional forecasters in standard surveys simultaneously extrapolate from recent events underreact to new information. Existing models expectation formation, whether behavioral or rational, cannot account for these observations. develop a rational theory extrapolation based on limited attention, which is consistent with this evidenc...

We analyze the ups and downs in economic growth recent decades by constructing a model with recurrent bubbles, crashes, endogenous growth. Once realized, bubbles crowd investment stimulate growth, but expectation about future crowds out reduces identify bubbly episodes estimating using US data. Counterfactual simulations suggest that IT housing not only caused booms also lifted GDP almost 2 per...

This paper studies the role of differences in patterns production and international trade on business cycle volatility emerging developed economies. We study a multisector small open economy which firms produce commodities manufactures. estimate model to match key cross-sectional time-series across countries. Emerging economies run surpluses deficits manufactures, while sectoral flows are balan...

Commonly used instruments for the identification of monetary policy disturbances are likely to combine true shock with information about state economy due disclosed through action. We show that this signaling effect can give rise empirical puzzles reported in literature, and propose a new high-frequency instrument shocks accounts informational rigidities. find tightening is unequivocally contra...

Motivated by the effects of COVID-19 pandemic, we present a theory Keynesian supply shocks: shocks that reduce potential output in sector economy, but that, reducing demand other sectors, ultimately push aggregate activity below potential. A shock is more likely when elasticity substitution between sectors relatively low, intertemporal high, and markets are incomplete. Fiscal policy can display...

Abstract: How asset prices should be taken into account in monetary policy is a controversial question mainstream discussion. These positions can differentiated two broad perspectives: the proactive and reactive views. The view advocates pricking price bubble, while argues against targeting prices. In this article relation between Austrian business cycle theory examined. Following this, critiqu...