Summary: Financial institutions are increasingly linked internationally. As a result, financial crisis and government intervention have stronger effects beyond borders. We provide a model of international contagion allowing for bank bailouts. While a social planner trades off tax distortions, liquidation losses and intra- and inter-country income inequality, in the non-cooperative game between governments there are inefficiencies due to externalities, no burden sharing and free-riding. We show that, in absence of cooperation, stronger interbank linkages make government interests diverge, whereas cross-border asset holdings tend to align them. We analyze different forms of cooperation and their effects on global and national welfare. -- bailout ; contagion ; financial crisis ; international institutional arrangements
Item Description: Systemvoraussetzungen: Acrobat Reader
Parallel als Druckausg. erschienen
Physical Description: Online-Ressource (PDF-Datei: 40 S., 370 KB)
graph. Darst.

Saved in bookmark lists

Similar items by topic

Similar items by author

Questions? LIVE CHAT