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Abstract
En 中文
We develop a quantitative equilibrium model of financial crises to assess the interaction between ex post interventions in credit markets and the buildup of risk ex ante. During a systemic crisis, bailouts relax balance sheet constraints and mitigate the severity of the recession. Ex ante, the anticipation of such bailouts leads to an increase in risk-taking, making the economy more vulnerable to a financial crisis. We find that moral hazard effects are limited if bailouts are systemic and broad-based. If bailouts are idiosyncratic and targeted, however, this makes the economy significantly more exposed to financial crises.
Keywords:
BUSINESS-CYCLE
FINANCIAL FRAGILITY
REAL WAGES
POLICY
LIQUIDITY
CRISES
GUARANTEES
DIVIDENDS
PRIVATE
SHOCKS
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11.6
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5.0K
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7.5W
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