Bank procyclicality, credit crunches, and asymmetric monetary policy effects: a unifying model
Much concern has recently been expressed that both large, procyclical changes in bank assets and "credit crunches" caused by bank reluctance to expand loans during recessions contribute to economic instability. These effects are difficult to explain using the standard textbook model of deposit expansion in which deposits are constrained only by reserve requirements. However, these effects follow easily if the model is expanded to include a second, capital constraint.
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- Anil Kashyap & Jeremy C. Stein, 1993.
"Monetary Policy and Bank Lending,"
NBER Working Papers
4317, National Bureau of Economic Research, Inc.
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"Credit, Money, and Aggregate Demand,"
NBER Working Papers
2534, National Bureau of Economic Research, Inc.
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- Donald P. Morgan, 1993. "Asymmetric effects of monetary policy," Economic Review, Federal Reserve Bank of Kansas City, issue Q II, pages 21-33.
- Ben S. Bernanke & Cara S. Lown, 1991. "The Credit Crunch," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 22(2), pages 205-248.
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