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following bad news about future needs for liquidity. Third, optimal monetary policy is time inconsistent. Fourth, macro …-prudential supervision is called for. We characterize the optimal regulation, which takes the form of a minimum liquidity requirement coupled … instruments is endogenous and characterize the structure of optimal bailouts. -- Monetary Policy ; Funding Liquidity Risk …
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We provide a model with endogenous portfolios of secured and unsecured household debt. Secured debt is collateralized by durables whereas unsecured debt can be discharged in bankruptcy procedures. We show that the model matches the main quantitative characteristics of observed wealth and debt...
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