We first document a strong negative correlation between the level of household net worth, and aggregate business cycle volatility over the past 50 years in the United States. The early 1960s and the Great Moderation of the 1980s and 1990s were periods of high asset values and low volatility. The...

We construct stochastic overlapping-generations general equilibrium models in which households are subject to aggregate shocks that affect both wages and asset prices. We use a calibrated version of the model to quantify how the welfare costs of severe recessions are distributed across different...

The 2008-2009 US crisis is characterized by an unprecedented degree of international synchronization, as all other G7 countries experienced large contractions. The international synchronization of the recent crisis is not present in many of the previous US contractions. We study a two-country...