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Interbank money markets have been subject to substantial impairments in the recent decade, such as a decline in unsecured lending and substantial increases in haircuts on posted collateral. This paper seeks to understand the implications of these developments for the broader economy and monetary...
Persistent link: https://www.econbiz.de/10012892834
Interbank money markets have been subject to substantial impairments in the recent decade, such as a decline in unsecured lending and substantial increases in haircuts on posted collateral. This paper seeks to understand the implications of these developments for the broader economy and monetary...
Persistent link: https://www.econbiz.de/10011975558
This paper develops an open economy portfolio balance model with endogenous asset supply. Domestic producers finance capital goods through credit and bonds in accordance with debt capital costs as well as through equity assets. Private households hold a portfolio of domestic and foreign assets,...
Persistent link: https://www.econbiz.de/10009161358
This paper introduces agent heterogeneity, liquidity, and endogenous default to a DSGE framework. Our model allows for a comprehensive assessment of regulatory and monetary policy, as well as welfare analysis in the different sectors of the economy. Due to liquidity and endogenous default, the...
Persistent link: https://www.econbiz.de/10003923247
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We investigate a model of liquidity sources that incorporates a general equilibrium feature of liquidity: when banks hold more liquidity, other sectors of the economy hold less of it and will consequently supply less in times of crisis. The private allocation of liquidity is inefficient and...
Persistent link: https://www.econbiz.de/10012976648
Should a policymaker manage expectations by offering forward guidance in terms of the likely value of a future policy instrument or a target for an equilibrium outcome such as aggregate output? We study how the optimal approach depends on plausible bounds on agents' depth of knowledge and...
Persistent link: https://www.econbiz.de/10012481051