MULTIMODALITY IN MACROFINANCIAL DYNAMICS

We estimate the evolution of conditional joint distribution economic and financial conditions. Although is approximately Gaussian during normal periods, sharp tightenings conditions lead to emergence additional modes. The U.S. economy has historically resolved quickly “good” mode, but we conjecture that poor policy choices could prolonged periods multimodality. argue multimodality arises naturally in a macrofinancial intermediary model with occasionally binding constraints.