Gains and losses would be measured in terms of market value and also in terms of cash flow, allowing regulators to assess risk magnitudes in terms of stresses to both economic values and also liquidity. Exposures would be measured before and after collateralization. One of the scenarios would be...

The consumption growth data strongly favor a two-regime specification. The high volatility, low growth regime is associated with deep recessions: the Great Depression, the recession of 1937-1938, the post-war recession of 1945, and the most recent financial crisis. I develop parsimonious models...