failing mechanism. I show that, as in the crisis, when collateral risk increases unexpectedly, the haircut and interest rate …

With an emphasis on contributing to macroeconomic pedagogy we examine the collateral multiplier by comparing it to the … creating deposits, the collateral multiplier is a measure of the shadow banking system's ability to inter- mediate sovereign … debt by creating shadow money. It also measures the degree of re-use of sovereign debt as collateral. In this setup, the …

collateral is scarce. We call this process shadow banking. A rise in uncertainty raises demand for crash-proof liquidity, forcing … intermediaries to delever and substitute toward safe, collateral- intensive liabilities. Shadow banking shrinks, causing the … liquidity supply to contract, discount rates and collateral premia spike, prices and investment fall. The model produces slow …