This paper presents a government debt game with the property that if the timing of debt auctions within a period is sufficiently unfettered, the set of equilibrium outcome paths of real economic variables given the government has access to a rich debt structure is identical to the set of...

In this paper, we argue that the anticipation of bailouts creates incentives for banks to herd in the sense of making similar investments. This herding behavior makes bailouts more likely and potential crises more severe. Analyses of bailouts and moral hazard problems that focus exclusively on...

Banks are vulnerable to self-fulfilling panics because their liabilities (such as demand deposits and certificates of deposit) are short term and unconditional, and their assets (such as mortgages and business loans) are long term and illiquid. To prevent wider financial fallout from such...

Banks are prone to panic-induced runs due to their traditional structure of short-term, unconditional liabilities and long-term, illiquid assets. To avoid systemic crises caused by such panics, governments tend to bail out failing banks. Traditional banking systems thus impose external costs....

Harvard economist shares her passion for historical research in areas such as urban slavery, the labor history of American women and the economic impact of educational movements.

A meticulous analysis reveals the full depth and breadth of U.S. economic inequality

In Ecuador, the transition to the U.S. dollar was sudden, dramatic and remarkably smooth.

Economic theory has been unable to explain the bond between competition and innovation. Until now.

Economist Pete Klenow analyzes price differences-over time, among products and across countries-to shed light on some of economics' most contentious issues