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Currency Crises and Monetary Policy in an Economy with Credit Constraints

Aghion, Philippe; Bacchetta, Philippe; Banerjee, Abhijit - 2000

This paper presents a simple model of currency crises which is driven by the interplay between the credit constraints of private domestic firms and the existence of nominal price rigidities. The possibility of multiple equilibria, including a "currency crisis" equilibrium with low output and a...

Persistent link: https://www.econbiz.de/10011430017

The Limits of Market Discipline in Reducing Banks' Risk Taking

Blum, Jürg - 2000

This paper analyzes the influence of market discipline on the risk-taking incentives of banks. It is shown that market … discipline reduces risk if banks can credibly commit to a given level of risk before the interest rate on deposits is set. If …, however, the bank can readjust the level of risk after the deposit rate is contracted, market discipline leads to an increase …

Persistent link: https://www.econbiz.de/10011430018

The Politics of Trade Liberalization in the Presence of FDI Incentives

Maechler, Andréa M. - 2000

This paper examines whether inward FDI incentives can soften the political constraints associated with trade liberalization. After introducing the role of capital inflows into the political economy of trade framework pioneered by Grossman and Helpman (1994, 1995 and 1996), the paper traces the...

Persistent link: https://www.econbiz.de/10011430019

Trade Flows, Prices, and The Exchange Rate Regime

Bacchetta, Philippe; van Wincoop, Eric - 2000

This paper examines the relationship between the exchange rate regime and trade flows using a general equilibrium model based on Bacchetta and van Wincoop (AER, 2000). We show that in general the link between trade and the exchange rate regime is ambiguous and that it depends in particular on...

Persistent link: https://www.econbiz.de/10011430021

Alternative Indicator of Moneary Policy for a Small Open Economy

Cuche, Nicolas A. - 2000

We analyze several identification frameworks based on operating procedures to measure monetary policy in a small open economy. We use a two-stage non-recursive VAR model to identify monetary shocks. We construct then various overall monetary policy indicators based on different residuals...

Persistent link: https://www.econbiz.de/10011430022

Are banks excessively monitored?

Birchler, Urs W. - 2000

Insufficient monitoring by depositors, and thus a lack of market discipline, are often seen as a typical feature of banks. We show that the opposite may be the case. Banks, defined as fims that borrow from a large number of partially uninformed investors, have a tendency to be excessively...

Persistent link: https://www.econbiz.de/10011430023

Financial Development and Stock Market performance

Dellas, Harris; Hess, Martin K. - 2000

risk diversification but not to higher returns. Two features seem responsible for these patterns: Higher transaction costs …

Persistent link: https://www.econbiz.de/10011430024

A corporate Balance-Sheet Approach to Currency Crises

Aghion, Philippe; Bacchetta, Philippe; Banerjee, Abhijit - 2001

This paper presents a general equilibrium currency crisis model of the "third generation", in which the possibility of currency crises is driven by the interplay between private firms' credit-constraints and nominal price rigidities. Despite our emphasis on microfoundations, the model remains...

Persistent link: https://www.econbiz.de/10011430025

Bank Integration and Business Volatility in the U.S.

Morgan, Don; Rime, Bertrand; Strahan, Philip - 2001

We investigate how bank migration across state lines over the last quarter century has affected the size and covariance of business fluctuations within states. Starting with a two-state version of the unit banking model in Holmstrom and Tirole (1997), we conclude that the theoretical effect of...

Persistent link: https://www.econbiz.de/10011430026

A Theory of the Currency Denomination of International Trade

Bacchetta, Philippe; van Wincoop, Eric - 2001

Nominal rigidities due to menu costs have become a standard element in closed economy macroeconomic modeling. The "New Open Economy Macroeconomics" literature has investigated the implications of nominal rigidities in an open economy context and found that the currency in which prices are set...

Persistent link: https://www.econbiz.de/10011430031