interest rate is lower. Due to binding borrowing constraints, in a HVE further reductions in the interest rate only bear a …

-cycle model where households face collateral constraints that tie their credit capacity to the value of their houses and examine … constraints is more prone to bubbles which, in turn, tend to have a larger size but are less fragile in face of funddraining …

collateral constraints. Second, credit flows are intermediated by monopolistically competitive banks, thus giving rise to …