Working Paper: NBER ID: w0691
Authors: Robert P. Flood Jr.; Peter M. Garber
Abstract: 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.
Keywords: No keywords provided
JEL Codes: No JEL codes provided
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| nominal interest rates (E43) | bank behavior (G21) |
| market fundamentals (G10) | systematic banking collapse (F65) |
| mass hysteria (H84) | systematic banking collapse (F65) |
| expectations of a collapse (D84) | market behavior (D40) |
| market behavior (D40) | systematic banking collapse (F65) |