Banking Panics and Deflation in Dynamic General Equilibrium - Softcover

Federal Reserve Board

 
9781511660488: Banking Panics and Deflation in Dynamic General Equilibrium
Softcover
ISBN 10: 1511660481 ISBN 13: 9781511660488
Verlag: CreateSpace Independent Publishing Platform, 2015

Inhaltsangabe

This paper develops a framework to study the interaction between banking, price dynamics, and monetary policy. Deposit contracts are written in nominal terms: if prices unexpectedly fall, the real value of banks existing obligations increases. Banks default, panics precipitate, economic activity declines. If banks default, aggregate demand for cash increases because financial intermediation provided by banks disappears. When money supply is unchanged, the price level drops, thereby providing incentives for banks to default. Active monetary policy prevents banks from failing and output from falling. Deposit insurance can achieve the same goal but amplifies business cycle fluctuations by inducing moral hazard.

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Verlag
CreateSpace Independent Publishing Platform
Erscheinungsdatum
2015
Sprache
Englisch
ISBN 10 
1511660481
ISBN 13 
9781511660488
Einband
Taschenbuch
Anzahl der Seiten
42
Kontakt zum Hersteller
Nicht verfügbar
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