TY - JOUR U1 - Wissenschaftlicher Artikel A1 - Herzog, Bodo T1 - Analyzing a Systemic Crisis in Finance JF - Journal of Game Theory N2 - A major lesson of the recent financial crisis is that money market freezes have major macroeconomic implications. This paper develops a tractable model in which we analyze the microeconomic and macroeconomic implications of a systemic banking crisis. In particular, we consider how the systemic crisis affects the optimal allocation of funding for businesses. We show that a central bank should reduce the interest rate to manage a systemic shock and hence smooth the macroeconomic consequences. Moreover, the analysis offers insight on the rational of bank behavior and the role of markets in a systemic crisis. We find that the failure to adopt the optimal policy can lead to economic fragility. KW - financing channels KW - money-market freeze KW - systemic crises Y1 - 2015 U6 - https://nbn-resolving.org/urn:nbn:de:bsz:rt2-opus4-5445 UN - https://nbn-resolving.org/urn:nbn:de:bsz:rt2-opus4-5445 UR - http://article.sapub.org/10.5923.j.jgt.20150402.01.html SN - 2325-0046 SS - 2325-0046 VL - 4 IS - 2 SP - 19 EP - 25 S1 - 7 PB - Scientific & Academic Publishing CY - Rosemead, California ER -