long-run risks in the economy and the responsiveness of banks to potential risk. …

stochastic general equilibrium model in which liquidity and capital regulations interact with the supply of risk-free assets. In … cycle, influencing the pricing of risk and the level of risk in the economy. Our analysis focuses on liquidity policies … addition, we find that intermediate ranges of risk-free asset supply achieve higher welfare. …

return prospects on the long-term investment turn out to be bad. For moderate return risk, equilibria with and without bank …