increases in the size of the shadow banking sector. However, the optimal response to shocks is sensitive to the resource costs …

enriched with a variety of financial frictions. This paper focuses on a special subset of these frictions, the shadow banking … system. We provide a structured review of the strand of literature that considers shadow banking in DSGE setups and draw … particular attention to the mod- eling approach as well as impact of shadow banking. Our analysis allows the following …

intermediate credit transactions. A preference shock is private information to a depositor, which is costly for intermediaries to … observe. Financial intermediaries create state-contingent deposit contracts for depositors at an optimum. Private information …