Hur, Sewon; Sosa Padilla, César; Yom, Zeynep - National Bureau of Economic Research - 2021
We study optimal bailout policies in the presence of banking and sovereign crises. First, we use European data to … document that asset guarantees are the most prevalent way in which sovereigns intervene during banking crises. Then, we build a … the private sector. Shocks to bank capital can trigger banking crises, with government sometimes finding it optimal to …