This course will consider alternative frameworks to think about financial frictions and aggregate economy activity to understand financial crisis, business cycle and public policies.
After a historical overview of financial crisis and a basic financial accelerator model, which emphasizes the interaction between borrowing constraint, asset price and aggregate production, the instructor will introduce the liquidity constraint in addition to borrowing constraint to examine financial deepening, business cycles and monetary policy.
Finally, the course will focus on financial intermediaries and government to study financial crisis, sovereign debt crisis, credit policy and macro prudential policy.
Rationale for macroprudential policy;
DSGE models with a financial sector;
Interactions between the real and the financial sectors;