A financial accelerator through coordination failure

摘要: This article studies the effect of liquidity crises in short-term debt markets a dynamic general equilibrium framework. Creditors (retail banks) receive imperfect signals regarding profitability borrowers (wholesale and, based on these and their beliefs about other creditors’ actions, choose whether to roll over funding, or not. The unco-ordinated actions creditors cause suboptimal incidence rollover, generating an illiquidity premium. Leverage magnifies this co-ordination inefficiency. Illiquidity shocks credit result sharp contractions output. Policy responses are analysed.