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We show that credit crises can be Self-Confirming Equilibria (SCE), which provides a new rationale for policy … interventions like, for example, the FRB's TALF credit-easing program in 2009. We introduce SCE in competitive credit markets with …. Nevertheless, credit crises - where high interest rates self-confirm high credit risk - can arise when lenders have correct beliefs …
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We show that credit crises can be Self-Confirming Equilibria (SCE), which provides a new rationale for policy … interventions like, for example, the FRB's TALF credit-easing program in 2009. We introduce SCE in competitive credit markets with …. Nevertheless, credit crises - where high interest rates self-confirm high credit risk - can arise when lenders have correct beliefs …
Persistent link: https://www.econbiz.de/10012998414
to curb the abuse of debt while reaping the benefits of credit. Beggar Thy Neighbor examines the major debt revolutions …
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This paper analyzes the effects of several policy instruments to mitigate financial bubbles generated in the banking sector. We augment a New Keynesian macroeconomic framework by endogenizing boundedly-rational expectations on asset values of loan portfolios and allow for interbank trading. We...
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