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Runs versus Lemons: Information Disclosure and Fiscal Capacity

Thomas Philippon (), Joseba Martinez and Miguel de Faria e Castro
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Miguel de Faria e Castro: NYU

Authors registered in the RePEc Author Service: Miguel Faria-e-Castro

No 1146, 2015 Meeting Papers from Society for Economic Dynamics

Abstract: We argue that, during financial crises, governments are forced to choose between runs and lemons. Revealing information about assets' quality can improve welfare by reducing adverse selection, but it can also create runs on weak banks. A credible fiscal backstop mitigates these risks and allows the government to pursue efficient but risky strategies of high disclosure. Our theory sheds light on optimal interventions and provides an explanation for the different choices that governments make during financial crises.

Date: 2015
New Economics Papers: this item is included in nep-cba
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Citations: View citations in EconPapers (4)

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Related works:
Journal Article: Runs versus Lemons: Information Disclosure and Fiscal Capacity (2017) Downloads
Working Paper: Runs versus Lemons: Information Disclosure and Fiscal Capacity (2016) Downloads
Working Paper: Runs versus Lemons: Information Disclosure and Fiscal Capacity (2015) Downloads
Working Paper: Runs versus Lemons: Information Disclosure and Fiscal Capacity (2015) Downloads
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