Showing papers by "Nobuhiro Kiyotaki published in 2020"
TL;DR: This article developed a model of banking panics which is consistent with two important features of the data: First, banking crises are usually preceded by credit booms and credit boom often do not result in crises.
22 citations
01 May 2020
TL;DR: In this paper, the authors study the welfare effects of macro-prudential policy in a macroeconomic model of banking instability and show that a simple countercyclical macro-policy can achieve non-negligible welfare gains.
Abstract: We study the welfare effects of macroprudential policy in a macroeconomic model of banking instability. Banking panics are endogenous economic disasters caused by banks' excessive leverage during credit booms. The model matches the frequency and severity of banking panics and the statistical relationship between panics and credit booms. A simple countercyclical macroprudential rule can achieve non-negligible welfare gains. These gains rise substantially when the run probability increases during a credit boom and, ex post, if a run is actually avoided. In a model without panics in which financial crises are driven by fundamentals only, the gains are much more limited.
11 citations