We consider how the industrial organization of the financial system affects an economy's macroeconomic performance. In particular, we compare two otherwise identical monetary economies -- one with a competitive and the other with a monopolistic banking system -- along the dimensions of bank...

It is commonly argued that poorly designed banking system safety nets are largely to blame for the frequency and severity of modern banking crises. For example, “underpriced” deposit insurance and/or low reserve requirements are often viewed as factors that encourage risk-taking by banks. In...

This paper describes a model in which monetary shocks have persistent real effects. Starting from the limited participation model of Christiano (1991) with capital adjustment costs as suggested by Dow (1995) it is confirmed that costs of equipment installation and restrictions on consumer...