We document the cyclical dynamics in the balance sheets of US leveraged nancial intermediaries in the post-war period. Leverage has contributed more than equity to uctuations in total assets. All three variables are several times more volatile than GDP. Leverage has been positively correlated ...
We study the transmission of liquidity shocks in a dynamic general equilibrium model where firms and households are subject to liquidity risk. The provision of liquidity services is undertaken by financial intermediaries that allocate the stock of liquid asset between the different sectors of th...
