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In this paper we set up a New-Keynesian model with a heterogenous banking sector to analyze liquidity problems on the interbank market. The presence of an interbank market is essential to consider a situation where an increased liquidity supply by the central bank is only partially passed on to...
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collateral constraint motivated by limited enforcement. Borrowing is secured by collateral in the form of durable goods whose … movements, which exacerbate fluctuations in the wedges induced by the collateral constraint. In this context optimality requires … deviations from price stability and calls for exchange rate stabilization. -- Global imbalances ; collateral constraints …
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