This paper presents a dynamic model of a bank’s optimal choices of imposing a binding liquidity-coverage-ratio (LCR) constraint. Our baseline balance-sheet dynamics starts with portfolio separation and no LCR constraint. Under a scenario in which regulators prohibit banks from applying...

We employ industry data to examine price stickiness of durables versus non-durables to evaluate Barsky et al. (2007) proposal that stickiness of durables’ prices influences aggregate dynamics. Policy impacts from impulse responses accord with sticky-price frameworks even though...