Theoretical companion explores funding constraints, networks, and policy effects on macro-financial dynamics.
Theoretical companion to the K-A-T monolith (Stanisljevic 2026d, SSRN Abstract ID 6668858). The paper proposes K-A-T as a structural framework with three channels (funding constraints K, network amplification A, policy backstop T) and derives Proposition 1: HL_i = ln 2 / (lambda_T + mu_i), with lambda_T proportional to T. As T -> 0, HL remains finite, bounded above by the natural decay rate, rejecting unbounded contagion in the absence of policy intervention. Validation via hierarchical Bayesian random-effects meta-analysis of ten historical T-shock episodes spanning four decades (Discount Window 2008, ECB SMP 2010, Operation Twist 2011, OMT 2012, USD swap-line 2020, FIMA 2020, SRF 2021, BoE LDI 2022, TPI 2022, BTFP 2023, SRF cap removal 2025). Grand-mean compression -64.9% (95% CI [-75.5%, -49.8%], p<0.0001, tau^2 = 0.202). Sensitivity to heterogeneity estimator (DerSimonian-Laird vs REML vs Paule-Mandel) shifts grand-mean by less than 1pp. Leave-one-out analysis confirms no single episode drives the result. The Feb-Apr 2026 private credit gate cascade is a held-out posterior predictive check; realized -73.0% lies inside the 95% predictive interval [-86.4%, -9.1%].
No takes yet. Share an insight, caveat, or question.
Luka Stanisljevic (2026) studied this question.
Synapse has enriched 5 closely related papers on similar clinical questions. Consider them for comparative context: