A Systematic Banking Collapse in a Perfect Foresight World
In this paper we present a model in which a systematic banking collapse is possible in a perfect foresight, general equilibrium context. Our aim is to determine con3itions under which a collapse will eventually occur and the timing of such a collapse. The collapse can occur endogenously, driven by market fundamentals. Alternatively, it can be caused by a mass hysteria which generates itself in reality. Vie also compare the assumptions and implications of our model to the observable phenomena of the 1930's.
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- Robert P. Flood & Peter M. Garber, 1981.
"Gold monetization and gold discipline,"
International Finance Discussion Papers
190, Board of Governors of the Federal Reserve System (U.S.).
- Buyer, Russell S. & Hodrick, Robert J., 1982. "The dynamic adjustment path for perfectly foreseen changes in monetary policy," Journal of Monetary Economics, Elsevier, vol. 9(2), pages 185-201.
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