Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/165991
Authors: 
Blattner, Tobias
Swarbrick, Jonathan
Year of Publication: 
2017
Abstract: 
We present a two-country model with an enhanced banking sector featuring risky lending and cross-border interbank market frictions. We find that (i) the strength of the financial accelerator, when applied to banks operating under uncertainty in an interbank market, will critically depend on the economic and financial structure of the economy; (ii) adverse shocks to the real economy can be the source of banking crisis, causing an increase in interbank funding costs, aggravating the initial shock; and (iii) asset purchases and central bank long-term refinancing operations can be effective substitutes for, or supplements to, conventional monetary policy.
Subjects: 
Interbank market
monetary union
financial frictions
cross-border capital flows
unconventional monetary policy
JEL: 
E44
E52
F32
F36
Document Type: 
Preprint

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