Sudden Financial Arrest

48 Pages Posted: 15 Nov 2009  

Ricardo J. Caballero

Massachusetts Institute of Technology (MIT) - Department of Economics; National Bureau of Economic Research (NBER)

Date Written: November 8, 2009

Abstract

There are striking and terrifying similarities between the sudden failure of a heart and that of a financial system. In the medical literature, the former is referred to as a sudden cardiac arrest (SCA). By analogy, I refer to its financial counterpart as a sudden financial arrest (SFA). In this article I describe SFA and its treatment guided by its medical counterpart.

Keywords: Financial crisis, panic, defibrillation, complexity, Knightian uncertainty, moral hazard, financial network, capital requirements, contingent capital, contingent insurance, IMF

JEL Classification: E32, E44, E58, F30, G01, G20

Suggested Citation

Caballero, Ricardo J., Sudden Financial Arrest (November 8, 2009). MIT Department of Economics Working Paper No. 09-29. Available at SSRN: https://ssrn.com/abstract=1504985 or http://dx.doi.org/10.2139/ssrn.1504985

Ricardo J. Caballero (Contact Author)

Massachusetts Institute of Technology (MIT) - Department of Economics ( email )

50 Memorial Drive
Building E52-528
Cambridge, MA 02142
United States
617-253-0489 (Phone)
617-253-1330 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Register to save articles to
your library

Register

Paper statistics

Downloads
169
rank
161,383
Abstract Views
1,041
PlumX