The United States is currently engulfed in the most severe financial crisis since the GreatDepression. The crisis was triggered by thecrash in the real estate “bubble” and amplifiedby the extreme concentration of risk in a highlyleveraged financial sector.Conventional wisdom is that both the...

Firms in emerging markets are exposed to severe financial frictions and credit constraints that are exacerbated by the sudden stop of capital inflows. Can monetary policy offset this external credit squeeze? We show that although this may be the case during moderate contractions (or in partial...

We develop a method for measuring the amount of insurance the portfolio of government liabilities provides against scal shocks, and apply it to postwar US data. We dene scal shocks as surprises in defense spending. Our results indicate that the US federal government is partially hedged against...