We develop and estimate a model of dynamic interactions in which commitment is limited and contracts are incomplete to explain the patterns of income and consumption growth in village economies of less developed countries. Households can insure each other through both formal contracts and...

This paper explores the interaction between a credit crunch and the maturity of government debt, focusing on its impacts on an economy with heterogeneous households. We find that an increase in debt maturity helps softening the economic slump that follows a credit crisis. We show that,...

This paper arms central bank policy makers with ways to think about interactions between financial stability and monetary policy. We frame the issue of whether to integrate financial stability into monetary policy operating rules by appealing to the observation that in actual economies financial...