Debt and the Macroeconomy: Leverage Cycles, Asset Prices and Crisis

This course will consider the role of leverage and asset prices for macroeconomic outcomes. It will first discuss stylized facts about leverage cycles, credit growth, interest rates and asset prices over the long-run, before moving on to studying financial crises.

In particular, it will focus on how different economic indicators perform in crisis prediction models, and ask what role bank capital ratio and liquidity ratios play for financial stability.

In the last part of the course the effectiveness of macro-prudential and monetary policy in taming credit cycles will be discussed, followed by an assessment of how such policies affect the real economy.