We study ex post efficient policy responses to a run on the banking system and the ex ante
incentives these responses create. We show that the efficient response to a run is typically …

We construct an endogenous growth model in which bank runs occur with positive
probability in equilibrium. In this setting, a bank run has a permanent effect on the levels of …

We examine how the possibility of a bank run affects the investment decisions made by a
competitive bank. Cooper and Ross [1998. Bank runs: liquidity costs and investment …

How should a government use the power to commit to ensure a desirable equilibrium
outcome? In this paper, I show a misleading aspect of what has become a standard …

In this paper, we study the interactions between fiscal and monetary policy in a frictional
economy where fiat money, bank deposits and short-term and long-term nominal …

A discretionary policy-maker responds to the state of the economy each period. Private
agents' current behavior determines the future state based on expectations of future policy …

Abstract We extend the Diamond-Dybvig model of bank runs to include a specification of
how much to deposit. When the propensity to run is zero, we prove an equivalence result …

Recent research has argued that the multiple-equilibria explanation of bank runs is
inconsistent with a basic stylized fact: bank runs tend to occur under poor economic …

This paper considers an optimal taxation environment where household income is private
information, and the government randomly audits and punishes households found to be …

We analyze in some detail the full predeposit game in a simple, tractable, yet very rich,
banking environment. How does run-risk affect the optimal deposit contract? If there is a run …