money demand falls, while a positive goods productivity shock raises temporary output and velocity. The paper explains such … important for velocity during less stable times and the goods productivity shock more important during stable times. …

. We decompose the VIX into two components, a proxy for risk aversion and expected stock market volatility ("uncertainty … monetary policy decreases risk aversion after about five months. Monetary authorities react to periods of high uncertainty by … through which monetary policy may affect risk aversion, e.g., through its effects on broad liquidity measures and credit. …

productivity shocks. Our model is built on the financial accelerator approach of Bernanke, Gertler and Gilchrist (BGG), in which … shocks. Financial institutions can only obtain their funds by paying an interest rate above the risk-free rate, and this risk …

corporate bonds is close to zero. In contrast, the empirical finance literature documents large and time-varying risk premia in … highly exposed to the risk of economic depression. This motivates introducing a small, time-varying risk of large economic … implications. An increase in disaster risk makes default more systematic, leading to higher risk premia, and higher expected …

We explore a view of the crisis as a shock to investor sentiment that led to the collapse of a bubble or pyramid scheme … in financial markets. We embed this view in a standard model of the financial accelerator and explore its empirical and …

within the club of poor states. The fraction of a shock to gross state product smoothed by the federal tax-transfer system is … regions and clubs, finding that most gains from risk sharing can be achieved within US regions. Since a considerable fraction … gains may be obtained from further improvement of risk sharing institutions. …