This paper provides a tractable framework for the joint explanation of the Global Financial Cycle and Global Imbalances. I show, both theoretically and empirically, that fluctuations in global banks’ leverage play a key role in driving global external imbalances.

The U.S. would not have grown its way out of its WWII debt without interest rate distortions and primary surpluses.

This paper discusses the welfare implications of inter-generational transfers and debt rollovers in a stochastic overlapping-generations (OLG) economy where the growth rate is higher than the safe rate but lower than the average marginal product of capital.

Global financial shocks explain a substantial share of equity return variability, but a much smaller portion of real output fluctuations, in a large sample of advanced and emerging economies.

Sovereign state-contingent bonds have rarely been issued in practice despite their theoretical benefits. This paper provides support for this apparent sovereign noncontingency puzzle by deriving the impact of GIBs on the upper tail of the distribution of the public debt-to-GDP ratio.

Measured FDI flows behave like portfolio debt flows. Our conclusions have implications for how researchers and policymakers should think about capital controls and the exclusion of measured FDI from such controls.

The introduction of growth-indexed bonds will benefit highly indebted advanced economies and, in the euro area, might provide a partial market-based solution to attain valuable insurance benefits well ahead of a formal fiscal union.