Fed paper sets out model of financial panics
Mark Gertler, Nobuhiro Kiyotaki and Andrea Prestipino examine banking panics in a DSGE model
Economists have added to efforts to reform the core framework of macroeconomics by proposing a method of modelling banking panics, presenting their results in a US Federal Reserve Board discussion paper.
Mark Gertler, Nobuhiro Kiyotaki and Andrea Prestipino choose to operate within the standard dynamic stochastic general equilibrium framework, which they say allows them to study the channels through which the crisis affects the economy, and the policies that might be used to contain the crisis
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