Hauck, A. ORCID: 0000-0002-6949-6732 and Vollmer, U., 2013. Emergency liquidity provision to public banks: rules versus discretion. European Journal of Political Economy, 32, pp. 193-204. ISSN 0176-2680
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Abstract
This paper analyzes a government's incentives to provide financial assistance to a public bank which is hit by a liquidity shock. We show that discretionary decisions about emergency liquidity assistance result in either excessively small or excessively large liquidity injections in a wide variety of circumstances. Also, adding a lender of last resort does not generally ensure a socially optimal policy. However, optimal rules exist that align the preferences of the government and/or a lender of last resort with social preferences by either subsidizing or taxing liquidity aid.
Item Type: | Journal article | ||||||
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Publication Title: | European Journal of Political Economy | ||||||
Creators: | Hauck, A. and Vollmer, U. | ||||||
Publisher: | Elsevier | ||||||
Date: | 2013 | ||||||
Volume: | 32 | ||||||
ISSN: | 0176-2680 | ||||||
Identifiers: |
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Divisions: | Schools > Nottingham Business School | ||||||
Record created by: | Jonathan Gallacher | ||||||
Date Added: | 22 Feb 2019 08:36 | ||||||
Last Modified: | 22 Feb 2019 08:39 | ||||||
URI: | https://irep.ntu.ac.uk/id/eprint/35791 |
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