This suggests that securitization in this market funds safe collateral.
How should a central bank act to stabilize the debt-to-GDP ratio?
We find that the best predictor of future employment for the non-employed is their duration since last employment.
For those OLF, the duration since last employment is only available via LFS histories and cannot be inferred from current-month responses.
Crises are generally initiated by a moderate adverse shock that puts pressure on intermediaries’ balance sheets, triggering a creditor run, a contraction in new lending, and ultimately a deep and persistent recession.
Analysis of the term structure of interest rates almost always takes a two-step approach.
Sustained periods when the real interest rate remains below the central bank's estimate of r-star can induce the agent to place a substantially higher weight on the deflation equilibrium, causing it to occasionally become self-fulfilling. In model simulations, raising the central bank's inflation target to 4% from 2% can reduce, but not eliminate, the endogenous switches to the deflation equilibrium. All of these developments may have contributed to an unusual buildup of financial instability.
Recent employment breaks negative duration dependence in unemployment exits and the unemployed who report long durations after recent employment have similar job finding rates as those who report short durations.Previous research showed that credit growth is a robust predictor of financial fragility.I find that changes in top income shares and productivity growth are strong early warning indicators as well.We show how the persistent nature of household debt shapes the answer to this question.In environments where households repay mortgages gradually, surprise interest hikes only weakly influence household debt, and tend to increase debt-to-GDP in the short run while reducing it in the medium run.