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The recent crisis in the United States has often been associated with substantial amounts of policy uncertainty. In this paper we ask how uncertainty about fiscal policy affects the impact of fiscal policy changes on the economy when the government tries to counteract a deep recession. The...
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lenders' beliefs about the probability of bailout. Events like Lehman's collapse are conceived of as "black swan" events that … led lenders to put a positive mass on bailout probabilities that were previously assigned zero mass. Results of the … analysis include: (i) An unanticipated increase in bailout uncertainty raises interest rates, the volume of defaults in both …
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lenders' beliefs about the probability of bailout. Events like Lehman's collapse are conceived of as ”black swan” events that … led lenders to put a positive mass on bailout probabilities that were previously assigned zero mass.Results of the … analysis include: (i) An unanticipated increase in bailout uncertainty raises interest rates, the volume of defaults in both …
Persistent link: https://www.econbiz.de/10013122330
Time-inconsistency of no-bailout policies can create incentives for banks to take excessive risks and generate …
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