Combining debt reduction with halting deforestation seems to be an attractive way of solving two urgent global problems at the same time at hardly any cost. But this view may be overly optimistic. What are the advantages and the drawbacks of debt-for-nature swaps? Are there any better alternatives?

Combining debt reduction with halting deforestation seems to be an attractive way of solving two urgent global problems at the same time at hardly any cost. But this view may be overly optimistic. What are the advantages and the drawbacks of debt-for-nature swaps? Are there any better alternatives?

The paper provides a baseline model for regulatory analysis of systemic liquidity shocks. We show that banks may have an incentive to invest excessively in illiquid long term projects. In the prevailing mixed strategy equilibrium the allocation is inferior from the investor’s point of view...

The paper models the interaction between risk taking in the financial sector and central bank policy. It shows that in the absence of central bank intervention, the incentive of financial intermediaries to free ride on liquidity in good states may result in excessively low liquidity in bad...

Traditionally, aggregate liquidity shocks are modelled as exogenous events. Extending our previous work (Cao & Illing, 2007), this paper analyses the adequate policy response to endogenous systemic liquidity risk. We analyse the feedback between lender of last resort policy and incentives of...