Nobuhiro Kiyotaki - A Macroeconomic Model with Financial Panics [Keynote address, 9th MFS Workshop]
Nobuhiro Kiyotaki presents his paper at the 9th Macro Finance Society Workshop, May 19-20, 2017, Chicago Fed: Keynote Address
A Macroeconomic Model with Financial Panics - by Mark Gertler, Nobuhiro Kiyotaki, Andrea Prestipino
This article incorporates banks and banking panics within a conventional macroeconomic framework to analyse the dynamics of a financial crisis of the kind recently experienced. We are particularly interested in characterizing the sudden and discrete nature of banking panics as well as the circumstances that make an economy vulnerable to such panics in some instances but not in others. Having a conventional macroeconomic model allows us to study the channels by which the crisis affects real activity both qualitatively and quantitatively. In addition to modelling the financial collapse, we also introduce a belief driven credit boom that increases the susceptibility of the economy to a disruptive banking panic.
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The mission of the Macro Finance Society (https://macrofinancesociety.org/) is to advance and disseminate high-quality research in Macro Finance, which is a broad area at the intersection of financial economics and macroeconomics. The research conducted at The Society emphasizes microeconomic foundations via (dynamic) structural modeling, while being grounded in the data. Members of The Society consist of both financial economists and macroeconomists, who share the common goal of advancing and disseminating high-quality research in Macro Finance.
Macro-finance addresses the link between asset prices and economic fluctuations. Macroeconomics (from the Greek prefix makro- meaning "large" + economics) is a branch of economics dealing with the performance, structure, behavior, and decision-making of an economy as a whole. Macroeconomists study topics such as GDP, unemployment rates, national income, price indices, output, consumption, unemployment, inflation, saving, investment, energy, international trade, and international finance. Asset prices are the prices for which financial instruments, such as stocks, bonds, currencies, etc., are bought and sold.
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