Answers are grounded in this paper and cite their sources.
Economic modeling study demonstrates the sudden onset of banking panics in vulnerable economies, suggesting policy interventions can mitigate severe contractions in real economic activity.
This paper incorporates banks and banking panics within a conventional macroeconomic framework to analyze the dynamics of a financial crisis of the kind recently experienced. We are particularly interested in characterizing the sudden and discrete nature of the banking panics as well as the circumstances that makes an economy vulnerable to such panics in some instances but not in others. Having a conventional macroeconomic model allows us to study the channels by which the crisis affects real activity and the effects of policies in containing crises.
No takes yet. Share an insight, caveat, or question.
Gertler et al. (2017) studied this question.
Synapse has enriched 10 related papers. Consider them for comparative context: