This paper incorporates information frictions in a credit cycle model, in which agents learn from prices. We find that learning from prices amplifies boom-bust dynamics. As a result, this influences the role of macroprudential policies that impact aggregate outcomes such as credit spreads. In...

This paper tests one specific monetary transmission mechanism through households: portfolio rebalancing. We use a unique panel dataset of household's credit and debit card spending, ATM withdrawals, financial investments into risky assets such as mutual funds and equities, as well as bank...