In 1913, Congress purposefully created the Federal Reserve as an independent central bank, which created a fundamental tension: how to ensure the Fed remains accountable to the electorate without losing its independence. Over the years, there have been changes in the Fed’s structure to improve...

This paper provides a simple two-depositor, two-stage model to understand how a bank’s withdrawal history affects an individual’s decision about withdrawals, which could possibly trigger bank runs. Individual depositors have private information about their personal consumption types and...

This article was originally presented as a speech at the Global Interdependence Center, Federal Reserve Bank of Philadelphia, August 21, 2003.

This article is a revised English translation of the Thunen Lecture, given at the Annual Congress of the Verein fur Socialpolitik, September 29, 2004, in Dresden, Germany.