We propose a new model for policy analysis of banking crises (or systemic bank runs) based on the monetary framework developed by Lagos and Wright (2005). If banks cannot enforce loan repayment and have to secure loans by collateral, a banking crisis due to coordination failure among depositors...

We construct a search-theoretic model à la Lagos and Wright (2005), that has multiple steady-state equilibria, one of which may be interpreted as a state of financial crisis. The key ingredient is the collateral-secured loan in the decentralized matching market, in which the borrowers must put...

In this paper, I demonstrate that expansionary fiscal policy associated with an increase in public debt can cause a persistent recession. I assume that entrepreneurs have borrowing constraints and that the government issues debt and collects tax from productive entrepreneurs. The government can...

In this paper, I demonstrate that the Laffer curve for a consumption tax increases monotonically and unboundedly in a closed economy in which the supply of one factor of production is fixed. Therefore, in this economy, an arbitrary amount of government debt can be made sustainable by choosing an...

In this paper, we propose a theoretical model in which a banking crisis (or bank distress) causes declines in aggregate productivity. When borrowing firms need additional bank loans to continue their businesses, a high probability of bank failure discourages ex ante investments (e.g., R&D...

We consider a new method of public goods provision: monetization. The government makes a particular public good the specie of money and commits itself to buy the public good at a predetermined nominal price and adjust money supply so that the ratio between the public good reserve and money...

Japan's public debt is increasing exponentially, and it is a primary policy objective to restore its sustainability. In this paper, I survey the existing research on the sustainability of the public debt in Japan and find that it might be necessary either to increase the consumption tax rate by...

Do large fluctuations arise from small shocks through financial frictions? In previous literature it is shown that a collateral constraint on intertemporal debt for consumption smoothing does not have a quantitatively significant effect on the response of output to unexpected shocks. We...

A news-driven business cycle is a business cycle in which positive news about the future causes a current boom defined as simultaneous increases in consumption, labor, investment, and output. Standard real business cycle models do not generate it. In this paper, we find that a fairly popular...

This paper theoretically examines an imaginary monetary regime in which the private provision of global public goods that reduce greenhouse gases ("emissions reducers," e.g., forests) is enhanced and the public goods are held in the private sector as monetary assets. We consider a monetary...