We study market illiquidity in an economy subject to non-fundamental shocks. Asset trading occurs via decentralized one-on-one bargaining. The model has multiple rational expectations equilibria; we associate certain Pareto inferior equilibria with liquidity crises. The government can improve...

Inspired by the Silicon Valley Bank run and building on Diamond- Dybvig (1993), we develop a model in which asset price fluctuations can trigger bank runs. Liquidation amounts to selling assets at their market price. Depositors can buy and hold the assets after paying an idiosyncratic cost. We...

I examine the effects of public debt on municipal services and real outcomes during financial crises using a unique archival dataset of U.S. cities from 1924 to 1943. Unlike today's countercyclical fiscal policies, the Great Depression provides a rare setting to observe fiscal shocks without...

The Global Financial Crisis and the COVID-19 pandemic were two major shocks to the world economy in the 21st century. In this study, we analyze the patterns of recessions and recoveries of 101 advanced and developing economies. We identify the turning points of recessions and expansions between...

Greater reliance on nonbank financing makes firms fragile as it leads banks to limit their access to credit lines. Besides demonstrating this result in panel tests subject to range of controls and robustness checks, we employ the 2014-16 oil-price collapse as an exogenous rollover risk in...

A salient trend in crisis intervention has emerged in recent decades: Government and central banks offered funding directly to nonfinancial firms, bypassing banks and other credit intermediaries. We analyze the long-term consequences of such policies by focusing on firm quality dynamics. In a...

Intermediary asset pricing posits that financial institutions are important players in financial markets, and that their decisions shape asset prices beyond simply reflecting the preferences of the average household in the economy. We explain how the intermediary-asset pricing approach helps...

The period after the Global Financial Crisis (GFC) was characterized by a considerable risk migration within global liquidity flows, away from cross-border bank lending towards international bond issuance. We show that the post-GFC shifts in the risk sensitivities of global liquidity flows are...

This paper examines the long-term impact of keeping versus losing one's home following a mortgage delinquency in the aftermath of the Great Recession, studying the trajectory of homeownership, consumption, and financial well-being over the subsequent decade. Our research design leverages the...