Question
The Diamond-Dybvig Model of Bank Runs 1. We know from problem Diamond's article (2007, p. 194) that are the socially optimal deposit returns when f=1/4.
The Diamond-Dybvig Model of Bank Runs
1. We know from problem Diamond's article (2007, p. 194) that are the socially optimal deposit returns when f=1/4. Suppose that, even though the true fraction of agents with liquidity needs in period 1 is , agents think (incorrectly) that the proportion is f=.60. Will there be a run?
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International Economics
Authors: Robert C. Feenstra, Alan M. Taylor
3rd edition
978-1429278515, 142927851X, 978-1319029517, 1319029515, 978-1429278447
