We introduce the concept of a financial stability real interest rate using a macroeconomic banking model with an occasionally binding financing constraint, as in Gertler and Kiyotaki (2010). The financial stability interest rate, r**, is the threshold interest rate that triggers the constraint...

This paper offers a novel theoretical approach to analyse the impacts of emission externalities and credit market failures on low-carbon investments. We use a principal-agent model with information asymmetries between borrowing firms and lenders. Firms can choose between a carbon-intensive...

We extend standard models of price pass-through in an imperfectly competitive supply chain to incorporate rationing of trade credit. Credit rationing reverses predictions concerning effects of raw material import prices on pass-through to wholesale prices, and effects of regulations of...

We provide new evidence that disruptions in firm's access to credit during the recent financial crisis had significant effects on product innovation in the consumer-goods sector. We combine highly granular retail-scan data with lending data from the Community Reinvestment Act and Dealscan and we...

We document that the interest rate response to fiscal stimulus (IRRF) is lower in countries with high inequality or high household debt. To interpret this evidence we develop a model in which households take on debt to maintain a consumption threshold (saving constraint). Now debt-burdened,...