Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/227876 
Year of Publication: 
2020
Series/Report no.: 
Danmarks Nationalbank Working Papers No. 158
Publisher: 
Danmarks Nationalbank, Copenhagen
Abstract: 
We study the effects of shadow banking panics in a macroeconomic model with a rich financial system, including deposit-financed retail banks and wholesale-financed shadow banks. The model can quantitatively match the dynamics of key variables around the US financial crisis. Wholesale funding market interventions akin to those implemented by the Federal Reserve in 2008 reduced the fall in output by about half a percentage point. Generally, central bank interventions reduce output volatility and the likelihood of banking panics.
Subjects: 
Financial Institutions
Financial Stability
Interconnectedness
Monetary Policy
JEL: 
E44
G24
G28
Document Type: 
Working Paper

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