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This paper studies the full equilibrium dynamics of an economy with financial frictions. Due to highly non-linear amplification effects, the economy is prone to instability and occasionally enters volatile crisis episodes. Endogenous risk, driven by asset illiquidity, persists in crisis even for very low levels of exogenous risk. This phenomenon, which we(More)
Introduction Model Previous Results Early Decisions Correlated Types Conclusion Introduction Financial intermediaries are commonly believed to be inherently " fragile " Take short-term deposits, make long-term investments Result: illiquidity short-term liabilities > short-term assets If all investors withdraw funds at once, intermediary will fail if(More)
We study the impact that the privatization process in Argentina had on income distribution and the welfare of the poor. We divide our study in three main areas: the consumption effect, the employment effect, and the fiscal effect. We use household survey data to try to identify those changes in the economic organization of Argentina that could be associated(More)
Bank of Canada working papers are theoretical or empirical works-in-progress on subjects in economics and finance. The views expressed in this paper are those of the author. No responsibility for them should be attributed to the Bank of Canada. ii Acknowledgements This is a chapter of my dissertation. I would like to thank my advisors Igor Livshits and(More)
I n recent years, important changes to the U.S. banking regulatory framework have been introduced that were expected to affect the size distribution of banks. These changes in regulation had a clear objective: to allow for a higher degree of horizontal and vertical integration in the banking industry. While horizontal integration takes place when different(More)