the guarantee-extending parties to "walk away". I derive the optimal risk management rule in such a framework and show … that it allows high volatility choices, while net worth is high. However, risk limits tighten abruptly when the firm's net … risk management rules, and can account for phenomena such as "flight to quality" …

Discussions of financial risk often fail to distinguish between risks that are consciously borne and those that are not …. To understand the breeding conditions for financial crises the prime focus of concern should not be simply on large risk … balance sheet of the public sector. The paper also discusses how risk exposures can be measured, hedged and transferred …

which financial markets were trying to allocate risk between heterogeneous agents when productive investment opportunities … are scarce. We begin by showing how heterogeneity in terms of risk tolerance can cause financial markets to propagate …

, and near-frictionless refinancing opportunities---led to vastly increased systemic risk in the financial system …

markets that had no connection to housing. We find that changes in the "LIB-OIS" spread, a proxy for counterparty risk, was …

This paper considers the meaning of domestic and international systemic risk. It examines scenarios that have been … adduced as creating systemic risk both within countries and among them. It distinguishes between the concepts of real and … pseudo-systemic risk. We examine the history of episodes commonly viewed either as financial crises or as evidencing systemic …

aggregate risk. We propose a theory to explain these risk exposures. We study a financial accelerator model where entrepreneurs … inefficiently high risk exposure for entrepreneurs …

on experiences with other measurement agendas to place in perspective the challenge of quantifying systemic risk, or more … researchers within both the academic community and the public sector in modeling and measuring systemic risk. In this essay I draw …