Booms and banking crises

Boissay, Frederic; Collard, Fabrice; Smets, Frank (2016). Booms and banking crises. Journal of political economy, 124(2), pp. 489-538. University of Chicago Press 10.1086/685475

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Banking crises are rare events that break out in the midst of credit-intensive booms and bring about deep and long-lasting recessions. This paper presents a textbook dynamic stochastic general equilibrium model to explain these phenomena. The model features a nontrivial banking sector, where bank heterogeneity gives rise to an interbank market. Moral hazard and asymmetric information in this market may lead to sudden market freezes, banking crises, credit crunches, and severe “financial” recessions. Those recessions follow credit booms and are not necessarily triggered by large exogenous adverse shocks.

Item Type:

Journal Article (Original Article)

Division/Institute:

03 Faculty of Business, Economics and Social Sciences > Department of Economics

UniBE Contributor:

Boissay, Frederic and Collard, Fabrice

Subjects:

300 Social sciences, sociology & anthropology > 330 Economics

ISSN:

0022-3808

Publisher:

University of Chicago Press

Language:

English

Submitter:

Eva Marina Zuberbühler

Date Deposited:

11 Jul 2017 13:17

Last Modified:

12 Sep 2017 19:07

Publisher DOI:

10.1086/685475

BORIS DOI:

10.7892/boris.93167

URI:

https://boris.unibe.ch/id/eprint/93167

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