Cookies?
Library Header Image
LSE Research Online LSE Library Services

A model to analyse financial fragility: applications

Goodhart, Charles, Sunirand, Pojanart and Tsomocos, Dimitrios P. (2004) A model to analyse financial fragility: applications. Financial Markets Group Discussion Papers (482). Financial Markets Group, The London School of Economics and Political Science, London, UK.

[img]
Preview
PDF - Published Version
Download (382kB) | Preview

Abstract

The purpose of our work is to explore contagious financial crises. To this end, we use simplified, thus numerically solvable, versions of our general model [Goodhart, Sunirand and Tsomocos (2003)]. The model incorporates heterogeneous agents, banks and endogenous default, thus allowing various feedback and contagion channels to operate in equilibrium. Such a model leads to different results from those obtained when using a standard representative agent model. For example, there may be a trade-off between efficiency and financial stability, not only for regulatory policies, but also for monetary policy. Moreover, agents which have more investment opportunities can deal with negative shocks more effectively by transferring ‘negative externalities’ onto others.

Item Type: Monograph (Discussion Paper)
Official URL: https://www.fmg.ac.uk/
Additional Information: © 2004 The Authors
Divisions: Financial Markets Group
Subjects: H Social Sciences > HB Economic Theory
JEL classification: D - Microeconomics > D5 - General Equilibrium and Disequilibrium > D52 - Incomplete Markets
G - Financial Economics > G1 - General Financial Markets
E - Macroeconomics and Monetary Economics > E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit
E - Macroeconomics and Monetary Economics > E4 - Money and Interest Rates
G - Financial Economics > G2 - Financial Institutions and Services
Date Deposited: 30 Jul 2009 15:50
Last Modified: 13 Sep 2024 19:53
URI: http://eprints.lse.ac.uk/id/eprint/24680

Actions (login required)

View Item View Item

Downloads

Downloads per month over past year

View more statistics