Edgworth's taxation paradox states that an excise tax can decrease the market price of a good.  This paper presents a new version of the paradox in which a tax reduces price because it attracts entry of additional firms into the market.  The paper also presents two new applications: (i) an...

This paper presents a simple model of risk-averse banks that face uncertainty over funding conditions in the money market.  It shows when increased funding uncertainty causes interest rates on loans and deposits to rise, while bank lending and bank profitability fall.  It also finds that...

The 2007-9 .financial crisis began with increased uncertainty over funding conditions in money markets. We show that funding uncertainty can explain diverse elements of commercial banks behaviour during the crisis, including:(i) reductions in lending volumes, balance sheets, and...