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In the Diamond-Dybvig banking model, suppose that the banking contract includes a suspension of convertibility provision according to which the bank allows only the first
In the Diamond-Dybvig banking model, suppose that the banking contract includes a suspension of convertibility provision according to which the bank allows only the first tN depositors in line in period 1 to withdraw their deposits. Will there be a bank run equilibrium? Carefully explain why or why not.
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