Essays on Inflation Expectations, Leaning Against the Wind Policy, and Consumer Bankruptcy

Abstract

Times of severe economic crisis are, fortunately, rare events. Large recessions, such as the Great Depression of the 1930s or the Great Recession during the late 2000s, have detrimental effects on all economic sectors. During such times, the public as well as the academic debate centers around the causes of the crisis and which policies are best suited to alleviate the economic fallout. In its three chapters, this thesis contributes to our understanding of the answers to these questions. It draws on empirical as well as structural macroeconomic results to foster our knowledge of potential causes of, and historical experiences with, deep economic crises. In particular, this thesis presents insights into the German experience during the Great Depression, the link between monetary policy and the likelihood of financial crises, and how competitive pricing of income risk in unsecured credit markets exacerbates business cycle fluctuations.