. Boom-bust dynamics are more likely when the risk-free interest rate is low because low rates strengthen belief … investment. The model thus features a 'financial accelerator', despite the absence of financial frictions. The financial … accelerator causes the economy to experience persistent periods of over- and under-accumulation of capital …

a significant and long-lasting negative impact on real GDP following an exogenous shock to the banking sector's write …

Using regionally disaggregated data on economic activity, we show that risk sharing plays a key role in shaping the … real effects of monetary policy. With weak risk sharing, monetary policy shocks trigger a strong and durable response in … output. With strong risk sharing, the response is attenuated, and output reverts to its initial level over the medium term …

eurozone. My results also suggest that these shocks are a plausible source of aggregate risk that could explain business cycle …

funding liquidity risk in their inter- mediation activity. Importantly, the amount of liquidity reserves held in the financial … liquidity, which strongly amplifies the initial shock and induces credit crunch dynamics sharing key features with the Great … Recession. The paper thus develops a new balance sheet channel of shock transmission that works through the composition of banks …