Public support works when big and well-aimed, study finds
Massive borrower support programmes need scale, conditionality and credibility to succeed
A working paper published this month by The Netherlands Bank puts forward a theoretical model for ‘bazookas', the term coined by former US Treasury Secretary Henry Paulson to describe large-scale public sector support operations for distressed financial institutions.
In A theory of bazookas; or ‘when (and when not) to use large-scale official sector support', Jon Frost models the interactions between a distressed bank, a public sector creditor and private sector investors within a simple four
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