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Banks and early deposit withdrawals in a new Keynesian framework

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  • Totzek, Alexander
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    Abstract

    When the current financial crisis has widened to a global economic crisis an urgent call for implementing financial markets and financial institutions in business cycle models emerged. By modelling commercial banks as a third type of economic agent, we are able to implement the feature of early deposit withdrawals in a New Keynesian model and to investigate the resulting implications for the real sector. The main results are that an extended withdrawal rate leads to persistent stagflationary effects which are dampened by reducing the refinancing costs of the banking sector and by increasing the loan rate stickiness.

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    File URL: https://www.econstor.eu/bitstream/10419/29540/1/612286290.pdf
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    Paper provided by Christian-Albrechts-University of Kiel, Department of Economics in its series Economics Working Papers with number 2009-08.

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    Date of creation: 2009
    Handle: RePEc:zbw:cauewp:200908
    Contact details of provider: Postal:
    D-24098 Kiel,Wilhelm-Seelig-Platz 1

    Phone: 0431-880 3282
    Fax: 0431-880 3150
    Web page: http://www.vwl.uni-kiel.de/en

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    Keywords: commercial banks; financial crises; deposit withdrawal;

    Find related papers by JEL classification:

    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General
    • G01 - Financial Economics - - General - - - Financial Crises

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