We use a macroeconomic euro area model with a bank sector to study the pro-cyclical effect of the capital regulation, focusing on the extra pro-cyclicality induced by Basel II over Basel I. Our results suggest that this incremental effect is modest. We also find that regulators could offset the...

The interaction between capital requirements and monetary policy is assessed by means of simple rules in a dynamic general equilibrium model featuring a banking sector. In “normal” times, when economic dynamics are driven by supply shocks, an active use of capital requirements generates...

We use a dynamic general equilibrium model featuring a banking sector to assess the interaction between macroprudential policy and monetary policy. We find that in “normal” times (when the economic cycle is driven by supply shocks) macroprudential policy generates only modest benefits for...

We argue that the behavioral theories suggesting that investors underreact to new information yield sharp testable implications concerning the sluggishness with which stock prices react to the arrival of news, and not concerning price continuation patterns, on which most of the literature has...

We argue that the behavioral theories suggesting that investors underreact to new information yield sharp testable implications concerning the sluggishness with which stock prices react to the arrival of news, and not concerning price continuation patterns, on which most of the literature has...

We address the question in the title using survey-based measures of financial constraints, as opposed to the proxies typically used in the literature. We find that in our dataset of Italian firms, those declaring to be financially constrained are smaller and younger than the others. However, the...

I argue that in order to test for the effect of the foundation of the Federal Reserve on the behavior of short-term interest rates, extending the sample size on either side of the interval 190%1918 will generate spurious results. Mankiw, Miron, and Weil (1987, 1994) do not address data problems...

The paper addresses the issue of the impact of the foundation of the Federal Reserve System in 1914 on the behavior of short-term interest rates. Empirical evidence is presented showing that no change of regime can be detected in the process governing short-term rates in the years straddling the...

The paper analyzes the evolution of competitive conditions in the Italian banking industry using firm-level balance sheet data for the period 1984-1997. Regulatory reform, large-scale consolidation and competitive pressure from other European countries have changed substantially the banking...