Optimal Diamond–Dybvig mechanism in large economies with aggregate uncertainty

Bruno Sultanum

Journal of Economic Dynamics and Control, 2014, vol. 40, issue C, 95-102

Abstract: This paper characterizes the direct mechanism which implements the constrained optimal outcome in a version of Diamond and Dybvig (1983) with aggregate uncertainty and a continuum of agents. Using this result, numerical examples where the best direct mechanism has a bank-run-equilibrium are easily obtained.

Keywords: Diamond–Dybvig model; Bank-run; Deposit contracts (search for similar items in EconPapers)
JEL-codes: D82 E58 G21 (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (13)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:dyncon:v:40:y:2014:i:c:p:95-102

DOI: 10.1016/j.jedc.2013.12.011

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