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Money under the mattress: Inflation and lending of last resort

Barlevy, Gadi; Bird, Daniel; Fershtman, Daniel; Weiss, David - 2022

Central banks create money to lend during credit crunches, which might lead to inflation. We examine whether the two … to buy assets. This feature allows for lending of last resort without creating inflation. Our analysis also provides a … new rationale for the "Bagehot rule": High interest rates prevent inflation, rather than mitigate the risk of lending …

Persistent link: https://www.econbiz.de/10013364535

Two crises, two ideas and one question

Laidler, David - 2012

Specific ideas about the Fisher relation between real and nominal interest rates and more general ideas about the nature of the central bank's duty to support the financial system in times of crisis were important to the Monetarist re-assessment of the causes of the Great Depression and what...

Persistent link: https://www.econbiz.de/10010291905

The Failure of Northern Rock: A multi-dimensional Case Study

Congdon, Tim; Goodhart, Charles A.E.; Eisenbeis, Robert A. - 2009

In August 2007 the United Kingdom experienced its first bank run in over 140 years. Although Northern Rock was not a particularly large bank (it was at the time ranked 7th in terms of assets) it was nevertheless a significant retail bank and a substantial mortgage lender. In fact, ten years...

Persistent link: https://www.econbiz.de/10011689937

Endogenous Systemic Liquidity Risk

Cao, Jin; Illing, Gerhard - 2008

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...

Persistent link: https://www.econbiz.de/10010427534

Three Liquidity Crises in Retrospective: Implications for Central Banking Today

Sauer, Stephan - 2007

Liquidity problems lie at the heart of crises on financial markets as demonstrated in this paper by detailed descriptions of the stock market crash in 1987, the LTCM-crisis in 1998 and the financial market consequences of 11 September 2001. The events also demonstrate that modern central banks,...

Persistent link: https://www.econbiz.de/10010427504

Spinning out of control: Iceland in crisis

2009

Persistent link: https://www.econbiz.de/10014306476

Iceland's financial crisis in an international perspective

Halldorsson, Olafur G. - 2010

Persistent link: https://www.econbiz.de/10014306487

Connected Lending of Last Resort

Mitchener, Kris James; Monnet, Eric - 2023

Because of secrecy, little is known about the political economy of central bank lending. Utilizing a novel, hand-collected historical daily dataset on loans to commercial banks, we analyze how personal connections matter for lending of last resort, highlighting the importance of governance for...

Persistent link: https://www.econbiz.de/10014290136

Reconciling Bagehot with the Fed's response to September 11

Martin, Antoine - 2005

The nineteenth-century economist Walter Bagehot maintained that in order to prevent bank panics, a central bank should provide liquidity at a very high rate of interest. However, most of the theoretical literature on liquidity provision suggests that central banks should lend at an interest rate...

Persistent link: https://www.econbiz.de/10010283386

Lender of last resort and bank closure policy

Freixas, Xavier; Parigi, Bruno Maria - 2008

During the last decades a consensus has emerged that it is impossible to disentangle liquidity shocks from solvency shocks. As a consequence the classical lender of last resort rules, as defined by Thornton and Bagehot, based on lending to solvent illiquid institutions appear ill-suited to this...

Persistent link: https://www.econbiz.de/10010264351

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