Shadow Banks and Macroeconomic Instability

Roland Meeks, Benjamin Nelson and Piergiorgio Alessandri

Journal of Money, Credit and Banking, 2017, vol. 49, issue 7, 1483-1516

Abstract: We develop a macroeconomic model in which commercial banks can offload risky loans to a “shadow” banking sector, and financial intermediaries trade in securitized assets. The model can account both for the business cycle comovement between output, traditional bank, and shadow bank credit, and for the behavior of macroeconomic variables in a liquidity crisis centered on shadow banks. We find that following a liquidity shock, stabilization policy aimed solely at the market in securitized assets is relatively ineffective.

Date: 2017
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Citations: View citations in EconPapers (43)

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https://doi.org/10.1111/jmcb.12422

Related works:
Working Paper: Shadow banks and macroeconomic instability (2014)
Working Paper: Shadow banks and macroeconomic instability (2013)
Working Paper: Shadow banks and macroeconomic instability (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:wly:jmoncb:v:49:y:2017:i:7:p:1483-1516

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