Working Paper: NBER ID: w24126
Authors: Mark Gertler; Nobuhiro Kiyotaki; Andrea Prestipino
Abstract: This paper incorporates banks and banking panics within a conventional macroeconomic framework to analyze the dynamics of a financial crisis of the kind recently experienced. We are particularly interested in characterizing the sudden and discrete nature of the banking panics as well as the circumstances that makes an economy vulnerable to such panics in some instances but not in others. Having a conventional macroeconomic model allows us to study the channels by which the crisis affects real activity and the effects of policies in containing crises.
Keywords: financial panics; banking crises; macroeconomic model
JEL Codes: E0; E44
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| banking panics (F65) | economic downturns (F44) |
| health of bank balance sheets (G21) | likelihood of bank run (E44) |
| weak bank balance sheets + negative shocks (F65) | bank run equilibrium (E44) |
| deteriorating economic conditions (E66) | probability of bank run (E44) |
| financial collapse (G33) | investment (G31) |
| financial collapse (G33) | output (C67) |
| financial collapse (G33) | employment (J68) |