Bank collapse and depression

John Bryant

No 56, Staff Report from Federal Reserve Bank of Minneapolis

Abstract: The recurrent banking panics of the 19th century and the Great Depression of the 1930s are widely viewed as failures of our economic system. A simple version of Samuelson?s overlapping generations model is used to generate such failures of Walrasian equilibrium. The spontaneous ?panics? generated involve a collapse of bank credit, causing in turn a drop in investment demand. The model suggests that both the recent technological advances in the intermediation industry and the current move towards deregulation of that industry are ominous developments.

Date: 1980
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Journal Article: Bank Collapse and Depression (1981)
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