Other publications may include books, quarterly reviews, annual reports and economic bulletins from the ECB, PhD theses and Danmarks Nationalbank’s policies.
Essays on the Interactions between Financial Markets, the Macroeconomy, and Economic Policy
This dissertation consists of four chapters, each of which can be read separately. All four chapters are concerned with the same overall topic though, namely the linkages between financial markets, the real economy, and economic policy. The importance of such linkages has been made painfully clear during the recent financial and economic crises. In retrospect, many macroeconomic models failed to pay sufficient attention to financial markets before the crisis. As a result, the last five years have seen the emergence of a large literature seeking to incorporate financial factors into models of the macroeconomy. In the first three chapters of this dissertation, I contribute to this literature. A particular topic that has received a certain attention in the wake of the crisis is the potential existence of non-linearities in the way financial markets affect the real economy. The first two chapters of this dissertation contain studies of the effects of various types of asymmetries or non-linearities that arise at the intersection between financial markets and the macroeconomy. In the third chapter, I introduce profit-maximizing banks and a version of relationship banking into a general equilibrium model of the macroeconomy. The absence of a banking sector was one important shortcoming of macroeconomic models before the crisis. Finally, in the fourth chapter of this dissertation, which is joint work with Morten Spange, we study the effects of fiscal policy in Denmark. In the wake of the crisis, fiscal policy has made a forceful return to the academic research agenda. Our study contributes to the recent literature about the circumstances under which the fiscal multiplier is likely to be large or small.