“Corrigendum to “The financial trilemma’’ [Economics letters 111 (2011) 57–59]”, Economics Letters, Volume 224, March 2023

Jérôme Mathis
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Jérôme Mathis: LEDa - Laboratoire d'Economie de Dauphine - IRD - Institut de Recherche pour le Développement - Université Paris Dauphine-PSL - PSL - Université Paris Sciences et Lettres - CNRS - Centre National de la Recherche Scientifique

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Abstract: I correct Proposition 1 in Schoenmaker [Economics letters 111 (2011) 57-59] which is stated in an ambiguous and misleading way. In his model of financial integration, his conclusion that national financial policies do not produce a stable financial system relies on an implicit selection of the inefficient closure equilibrium. I correct this result and show that no matter how financially integrated the ailing bank is, there is always an efficient equilibrium in which countries make sufficient contributions to rescue the bank. Therefore, financial stability, national financial policies, and financial integration are jointly compatible in Schoenmaker's model.

Keywords: Banking; Financial bailout; Financial stability; Financial trilemma; International finance (search for similar items in EconPapers)
Date: 2023
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Published in Economics Letters, 2023, 224 (March 2023), ⟨10.1016/j.econlet.2023.111000⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-04244382

DOI: 10.1016/j.econlet.2023.111000

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