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Taking Banks to Solow

In: Contemporary Issues in Macroeconomics

Author

Listed:
  • Hans Gersbach

    (CER-ETH—Center of Economic Research at ETH Zurich and CEPR)

  • Jean-Charles Rochet

    (University of Zurich)

  • Martin Scheffel

    (University of Cologne)

Abstract

The integration of financial intermediaries with own balance sheets into macroeconomic models is an important scientific endeavor. It promises not only new insights into the role of banks for economic activity, but it might also help identifying suitable regulation of the banking system and policies to deal with fluctuations or default in this system that could spill over to the other parts of the economy. Since the first attempts,1 the literature has advanced significantly and is briefly discussed below. In this paper we pursue a complementary route. We examine whether and how banks make a difference in standard macroeconomic models. In particular, the Solow and Ramsey (or Ramsey-Cass-Koopmans) models are starting points for the study of accumulation and growth processes in economics and have inspired a large branch of dynamic macroeconomic models. In the sequel, we study how these models can be combined with banks and their role in the intermediation of funds.

Suggested Citation

  • Hans Gersbach & Jean-Charles Rochet & Martin Scheffel, 2016. "Taking Banks to Solow," International Economic Association Series, in: Joseph E. Stiglitz & Martin Guzman (ed.), Contemporary Issues in Macroeconomics, chapter 13, pages 176-198, Palgrave Macmillan.
    • Handle: RePEc:pal:intecp:978-1-137-52958-9_14
    DOI: 10.1057/9781137529589_14
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    Cited by:

    1. Hans Gersbach & Jean-Charles Rochet & Martin Scheffel, 2023. "Financial Intermediation, Capital Accumulation, and Crisis Recovery," Review of Finance, European Finance Association, vol. 27(4), pages 1423-1469.
    2. Rochet, Jean Charles & Gersbach, Hans & Scheffel, Martin, 2015. "Financial Intermediation, Capital Accumulation, and Recovery," CEPR Discussion Papers 10964, C.E.P.R. Discussion Papers.

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    More about this item

    Keywords

    Interest Rate; Monetary Policy; Total Factor Productivity; Saving Rate; Household Wealth;
    All these keywords.

    JEL classification:

    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • F44 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Business Cycles
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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