deWalque, Gregory; Pierrard, Olivier; Rouabah, Abdelaziz - In: Economic Journal 120 (2010) 549, pp. 1234-1261
We develop a DSGE model with a heterogeneous banking sector. We introduce endogenous default probabilities for both firms and banks, and allow for bank regulation and liquidity injections into the interbank market. We aim to understand the interactions between the banking sector and the rest of...