Showing papers by "Nobuhiro Kiyotaki published in 2015"
TL;DR: In this article, a variation of the macroeconomic model of banking in Gertler and Kiyotaki (2011) was developed that allows for liquidity mismatch and bank runs as in Diamond and Dybvig (1983).
Abstract: We develop a variation of the macroeconomic model of banking in Gertler and Kiyotaki (2011) that allows for liquidity mismatch and bank runs as in Diamond and Dybvig (1983). As in Gertler and Kiyotaki, because bank net worth ‡uctuates with aggregate production, the spread between the expected rates of return on bank assets and deposits ‡uctuates countercyclically. However, because bank assets are less liquid than deposits, bank runs are possible as in Diamond and Dybvig. Whether a bank run equilibrium exists depends on bank balance sheets and an endogenous liquidation price for bank assets. While in normal times a bank run equilibrium may not exist, the
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