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Banks and markets in a monetary economy

Author

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  • Antinolfi, Gaetano
  • Kawamura, Enrique
Abstract
Modern financial sectors consist of banks, asset markets and a central bank. This paper builds a model where these institutions provide different financial services, and their interaction supports efficient allocations. When one institution is missing equilibria are, by construction, inefficient. The paper analyzes how interest rates and asset prices depend on the structure of the financial sector and characterizes the central bank policy that supports efficient allocations. The analysis relies on the difference between liquidity and real shocks, and relates the notion of liquidity used in this paper to the one adopted in other studies.

Suggested Citation

  • Antinolfi, Gaetano & Kawamura, Enrique, 2008. "Banks and markets in a monetary economy," Journal of Monetary Economics, Elsevier, vol. 55(2), pages 321-334, March.
    • Handle: RePEc:eee:moneco:v:55:y:2008:i:2:p:321-334
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    References listed on IDEAS

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    1. Antinolfi, Gaetano & Huybens, Elisabeth & Keister, Todd, 2001. "Monetary Stability and Liquidity Crises: The Role of the Lender of Last Resort," Journal of Economic Theory, Elsevier, vol. 99(1-2), pages 187-219, July.
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    Cited by:

    1. Javier García-Cicco & Enrique Kawamura, 2014. "Central Bank Liquidity Management and “Unconventional” Monetary Policies," Economía Journal, The Latin American and Caribbean Economic Association - LACEA, vol. 0(Fall 2014), pages 39-87, June.
    2. Edgar A. Ghossoub & Robert R. Reed, 2013. "The Stock Market, Monetary Policy, and Economic Development," Southern Economic Journal, John Wiley & Sons, vol. 79(3), pages 639-658, January.
    3. Edgar A. Ghossoub, 2015. "Endogenous Financial Structure and Monetary Policy," Working Papers 0153eco, College of Business, University of Texas at San Antonio.
    4. Edgar A. Ghossoub & Thanarak Laosuthi & Robert R. Reed, 2012. "The role of financial sector competition for monetary policy," Canadian Journal of Economics, Canadian Economics Association, vol. 45(1), pages 270-287, February.
    5. Edgar A. Ghossoub, 2015. "Endogenous Financial Structure and Monetary Policy," Working Papers 0162eco, College of Business, University of Texas at San Antonio.

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