Financial institutions are increasingly linked internationally. As a result, financial crisis and government intervention have stronger effects beyond borders. We provide a model of international contagion allowing for bank bailouts. While a social planner trades off tax distortions, liquidation...

Jonathan Carmel explains that the auctions on which the Paulson plan relies are no magic bullet, and the problems of adverse selection that are causing the banks trouble could continue after $700 billion is spent.

On the occasion of the 65th birthday of Governor Klaus Liebscher and in recognition of his commitment to Austria’s participation in European monetary union and to the cause of European integration, the Oesterreichische Nationalbank (OeNB) established a “Klaus Liebscher Awardâ€....

The paper shows that the effect of the Emergency Economic Stabilization Act (EESA) is ambiguous. It discusses the benefits and costs of mark-to-market valuation and design of executive pay package policies within the US 2009 EESA. It highlights how the mark-to-market valuation standard...

The paper shows that the effect of the Emergency Economic Stabilization Act (EESA) is ambiguous. It discusses the benefits and costs of mark-to-market valuation and design of executive pay package policies within the US 2009 EESA. It highlights how the mark-to-market valuation standard...

The spectacular failure of the 150-year old investment bank Lehman Brothers on September 15th, 2008 was a major turning point in the global financial crisis that broke out in the summer 2007. Through the use of stock market data and Credit Default Swap (CDS) spreads, this paper examines the...

We study interventions to restore efficient lending and investment when financial markets fail because of adverse selection. We solve a design problem where the decision to participate in a program offered by the government can be a signal for private information. We charac terize optimal...