Systemic risk and the pursuit of efficiency

Kartik Athreya

Annual Report, 2009, 4-20

Abstract: In this essay, senior economist Kartik Athreya identifies systemic risk with the presence of linkages between market participants, where problems for one directly create problems for others. He argues that such situations can arise from the use of contractual arrangements, especially debt that requires frequent refinancing and liquidation in the event of an inability to repay. The presence of spillover effects can, in turn, lead to outcomes in the wake of shocks that can be improved via policy intervention. Nonetheless, he cautions against taking this as a license to intervene after the fact, and instead suggests that observed contracting arrangements may be important in promoting efficient trade between parties from a \\"before the shock\\" perspective.

Keywords: Markets; Risk (search for similar items in EconPapers)
Date: 2009
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://richmondfed.org/publications/research/annual_report/2009/index.cfm (text/html)
https://www.richmondfed.org/-/media/RichmondFedOrg ... 2009/pdf/article.pdf (application/pdf)

Related works:
Journal Article: Systemic Risk and the Pursuit of Efficiency (2015)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:fip:fedrar:y:2009:p:4-20

Ordering information: This journal article can be ordered from

Access Statistics for this article

More articles in Annual Report from Federal Reserve Bank of Richmond Contact information at EDIRC.
Bibliographic data for series maintained by Christian Pascasio ().