We develop a model with diagnostic expectations (DE) and a financial accelerator (FA) that generates mutually … reinforcing shock amplification, especially in the case of demand shocks. However, supply shocks can be dampened via a debt … asset prices—our financial accelerator model with DE suggests that targeting house price growth may result in welfare gains …

model includes a financial accelerator--entrepreneurs are assumed to partially finance investment using domestic and foreign … importance of the financial accelerator in India and the optimality of monetary policy …

The recent credit crisis started as a credit shock and then rapidly promulgated in the form of market and funding …

decomposing U.S. interest rates changes into two orthogonal shocks: the pure monetary policy shock and the information news shock … shocks. Moreover, high oil prices mitigate both spillovers for oil exporters while global risk appetite amplifies both … countries, with oil exporters with stronger fundamentals withstanding well the shock and oil importers with weaker fundamentals …