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-shifting response of the banking sector to monetary easing. It provides a closed economy DSGE model for the Euro zone with costly bank … easing. Capital requirements decline asymmetrically, which creates a risk-shifting impulse. Sticky bank capital rents can …
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I provide an explanation for the puzzle of slow recovery of aggregate real variables from financial crises. My model features a representative investor who finances firms with optimal long-term contracts derived from a moral hazard problem. An increase in uncertainty about firm-productivity...
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targeting bank management and, to a lesser extent, penalties mitigate moral hazard. Weak interventions, such as warnings, do not …
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state, when the central bank solves a finite-horizon decision problem where the policy rate is allowed to also be zero or …
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prices, complicating economic calculation and entrepreneurial planning, and contributes to boom-bust cycles. The Bank of … Austrian theory) stabilized even though British blockades significantly reduced Dutch bread grain imports. We attribute this …
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