Economic growth, liquidity, and bank runs |
| |
Authors: | Huberto M. Ennis |
| |
Affiliation: | a Research Department, Federal Reserve Bank of Richmond, P.O. Box 27622, Richmond, VA 23261, USA b Centro de Investigación Económica, Instituto Tecnológico Autónomo de México (ITAM), Av. Camino Santa Teresa 930, México, DF 10700, Mexico |
| |
Abstract: | We construct an endogenous growth model in which bank runs occur with positive probability in equilibrium. In this setting, a bank run has a permanent effect on the levels of the capital stock and of output. In addition, the possibility of a run changes the portfolio choices of depositors and of banks, and thereby affects the long-run growth rate. These facts imply that both the occurrence of a run and the mere possibility of runs in a given period have a large impact on all future periods. A bank run in our model is triggered by sunspots, and we consider two different equilibrium selection rules. In the first, a run occurs with a fixed, exogenous probability, while in the second the probability of a run is influenced by banks’ portfolio choices. We show that when the choices of an individual bank affect the probability of a run on that bank, the economy both grows faster and experiences fewer runs. |
| |
Keywords: | E42 G21 O42 |
本文献已被 ScienceDirect 等数据库收录! |
|