A Macroeconomic Model with Financial Panics

62 Pages Posted: 19 Dec 2017

See all articles by Mark Gertler

Mark Gertler

New York University - Leonard N. Stern School of Business - Department of Economics; National Bureau of Economic Research (NBER)

Nobuhiro Kiyotaki

Princeton University - Department of Economics

Andrea Prestipino

Board of Governors of the Federal Reserve System

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Date Written: December 2017

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.

Suggested Citation

Gertler, Mark and Kiyotaki, Nobuhiro and Prestipino, Andrea, A Macroeconomic Model with Financial Panics (December 2017). NBER Working Paper No. w24126, Available at SSRN: https://ssrn.com/abstract=3089522

Mark Gertler (Contact Author)

New York University - Leonard N. Stern School of Business - Department of Economics ( email )

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Nobuhiro Kiyotaki

Princeton University - Department of Economics ( email )

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Andrea Prestipino

Board of Governors of the Federal Reserve System ( email )

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