A note on convergence of Peck-Shell and Green-Lin mechanisms in the Diamond-Dybvig model
We study the effects of population size in the Peck-Shell analysis of bank runs. We find that a contract featuring equal-treatment for almost all depositors of the same type approximates the optimum. Because the approximation also satisfies Green-Lin incentive constraints, when the planner discloses positions in the queue, welfare in these alternative specifications are sandwiched. Disclosure, however, it is not needed since our approximating contract is not subject to runs.
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- Andolfatto, David & Nosal, Ed & Wallace, Neil, 2007.
"The role of independence in the Green-Lin Diamond-Dybvig model,"
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- David Andolfatto & Ed Nosal & Neil Wallace, 2006. "The role of independence in the Green-Lin Diamond-Dybvig model," Working Paper 0615, Federal Reserve Bank of Cleveland.
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"Equilibrium Bank Runs,"
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University of Chicago Press, vol. 111(1), pages 103-123, February.
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- James Peck & Karl Shell, 2003. "Bank Portfolio Restrictions and Equilibrium Bank Runs," Levine's Bibliography 666156000000000077, UCLA Department of Economics.
- R. de O. Cavalcanti & P. K. Monteiro, 2016.
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Springer;Society for the Advancement of Economic Theory (SAET), vol. 62(3), pages 477-494, August.
- Cavalcanti, Ricardo de Oliveira & Monteiro, P. K., 2011. "Enriching information to prevent bank runs," Economics Working Papers (Ensaios Economicos da EPGE) 721, FGV/EPGE Escola Brasileira de Economia e Finanças, Getulio Vargas Foundation (Brazil).
- Douglas W. Diamond & Philip H. Dybvig, 2000.
"Bank runs, deposit insurance, and liquidity,"
Federal Reserve Bank of Minneapolis, issue Win, pages 14-23.
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