Bank runs are relatively rare events characterized by highly pessimistic depositor’s expectations. How would pessimistic depositors expect to be treated in a bank run? How will this affect their behaviour? How can Banks handle this kind of risk? In the framework of a Diamond-Dybvig- Peck-Shell...

This paper develops a generalised version of the life-cycle model in which consumers’ preferences are defined over components of consumption and are affected by the level of public expenditure on goods and services. The model implies that the crowding out of private consumption could in fact...

State guarantees to insurance policy-holders remove the need for counterparty credit risk assessment and create a moral hazard that may result in excessive risk-exposure and underpricing in the insurance industry. The arrangements at Lloyd’s guaranteeing payment on policies written by...

A basic analysis of stock market excess return data shows both linear and non-linear dependence present. Previous papers have used this to argue that it must therefore be possible to predict future values. However, this paper shows that the linear and non-linear dependence can be explained by...

In this paper, we investigate empirically the relationship between inflation and inflation uncertainty in twelve EMU countries. We estimate a time-varying parameter model with a GARCH specification for the conditional volatility of inflation in order to distinguish between short-run (structural...

A partial equilibrium model is used to examine the international production allocation of a two-plant risk averse multinational firm which is confronted with uncertainty with respect to foreign sales. The firm has price-discriminating monopoly power in both markets and uses specific factors in...

The present paper examines the financial development of Belarus over the past decade with a particular focus on 1996-2002, when the financial sector was restrained through pervasive government controls in the form of interest rate ceilings, directed credit and preferential loans schemes, high...

Barro’s original partial equilibrium tax-smoothing model has generated a tremendous amount of empirical interest over the last several decades. However, to date, there has been no formal empirical testing of the more recent general equilibrium renditions of this model. Therefore, the purpose...