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Monetary Stability and Liquidity Crises : The Role of the Lender of Last Resort

Antinolfi, Gaetano - 2013

We evaluate the desirability of having an elastic currency generated by a lender of last resort that prints money and lends it to banks in distress. When banks cannot borrow, the economy has a unique equilibrium that is not Pareto optimal. The introduction of unlimited borrowing at a zero...

Persistent link: https://www.econbiz.de/10013086699

Discount window policy, banking crises, and indeterminacy of equilibrium

Antinolfi, Gaetano; Keister, Todd - In: Macroeconomic dynamics 10 (2006) 1, pp. 1-19

Persistent link: https://www.econbiz.de/10003258339

Cournot fire sales

Eisenbach, Thomas M.; Phelan, Gregory - 2018

illiquid assets or underprovision of liquidity. We investigate whether imperfect competition (Cournot) improves welfare through … internalizing the externality and find that this is far from guaranteed. In a standard model of liquidity shocks, when liquidity is … sufficiently scarce, Cournot competition leads to even less liquidity than the Walrasian equilibrium. In a standard model of …

Persistent link: https://www.econbiz.de/10011806238

Central Bank Participation in Currency Options Markets

2021

This paper analyzes whether and how central banks can use currency options to lower exchange rate volatility and maintain (implicit) target zones in foreign exchange markets. It argues that selling rather than buying options will result in market makers dynamically hedging their long option...

Persistent link: https://www.econbiz.de/10013212109

The Equity Premium Puzzle Solution : Incentives to Under-Report Inflation

Korsos, Laszlo - 2020

The biggest and most well-known unsolved problem in academic finance is famously referred to as the Equity Premium Puzzle. It refers to the unexplained phenomenon that for over 100 years the average return on a well-diversified portfolio of equities has far outperformed that of risk-free,...

Persistent link: https://www.econbiz.de/10012838903

Verdict on the Crash : Causes and Policy Implications

Booth, Philip - 2009

This monograph challenges the myth that the recent banking crisis was caused by insufficient statutory regulation of financial markets. Though it finds that statutory regulation failed, and that market participants took more risks than they should have done, it appears that statutory regulation...

Persistent link: https://www.econbiz.de/10013156184

Exigent and Unusual Circumstances : The Federal Reserve and the U.S. Financial Crisis

Johnson, Christian A. - 2013

Liquidity Facility, Commercial Paper Funding Facility, Money Market Investor Funding Facility, Primary Dealer Credit Facility …

Persistent link: https://www.econbiz.de/10013094881

Special-Purpose Central Bank Digital Currencies : A Proposal

Dorse, Antoni; Barrull, Xavier - 2022

Central banks (CB) around the world are currently exploring the implications of issuing a new form of sovereign currency known as Central Bank Digital Currency (CBDC). Introducing CBDC is a compelling need for governments and CBs alike, as powerful private players have already taken the lead in...

Persistent link: https://www.econbiz.de/10013406502

The Lender of Last Resort in a General Equilibrium Framework

Kotak, Akshay - 2017

heterogeneous agents and a risk-averse banking sector, and incorporate the frictions of endogenous default, liquidity, and money …

Persistent link: https://www.econbiz.de/10012945261

Banking Panics and Deflation in Dynamic General Equilibrium

Carapella, Francesca - 2015

This paper develops a framework to study the interaction between banking, price dynamics, and monetary policy. Deposit contracts are written in nominal terms: if prices unexpectedly fall, the real value of banks' existing obligations increases. Banks default, panics precipitate, economic...

Persistent link: https://www.econbiz.de/10013024089