The paper considers the sizes of banking sectors that are vulnerable to runs when the central bank cares about economic stability and currency peg credibility. It is shown that when banks are small, the central bank will recapitalize unhealthy banks because doing so will not compromise its peg....

In 2008--2009, the US government spent trillions of dollars to bailout its financial system and prevent insolvency due to a deterioration in domestic loan portfolios. The following dips in US bond prices suggest that global investors feared that the US was over-extending itself and might be...

Because monetary policy is constrained in fixed exchange rate regimes, banks should expect fewer money-financed bailouts and therefore manage their risks more carefully when exchange rates are fixed than when they are flexible. It follows that we should observe fewer banking crises in countries...

Political instability has been blamed for many poor macroeconomic outcomes, such as high inflation, unemployment, and low growth. The author proposes yet another negative consequence of political instability: political instability and polarization generate inflation uncertainty which causes the...

Le Sherman Silver Purchase Act de 1890 a causé des craintes d'inflation et une série d'attaques sur les réserves du Trésor Américain. Malgré ces attaques, le dollar s'est maintenu durant cette période. On peut se demander pourquoi. Un argument (Fels (1959)) est que les spéculateurs...