Pecuniary externalities, bank overleverage, and macroeconomic fragility
نویسندگان
چکیده
Pecuniary externalities in models with financial friction justify macroprudential policies for preventing excessive risk taking by economic agents. We extend the Diamond and Rajan model of banks production factors explore how a pecuniary externality affects bank's leverage. show that laissez-faire our take on risks compared constrained social optimum. Our numerical simulations suggest crisis probability is 2–3 percentage points higher economy than
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ژورنال
عنوان ژورنال: International Journal of Economic Theory
سال: 2021
ISSN: ['1742-7363', '1742-7355']
DOI: https://doi.org/10.1111/ijet.12325