Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/78708
Authors: 
Lengnick, Matthias
Krug, Sebastian
Wohltmann, Hans-Werner
Year of Publication: 
2013
Citation: 
[Journal:] Economics: The Open-Access, Open-Assessment E-Journal [Volume:] 7 [Issue:] 2013-32 [Pages:] 1-44
Abstract: 
The authors develop a simple agent-based and stock flow consistent model of a monetary economy. Their model is well suited to explain money creation along the lines of mainstream theory. Additionally it uncovers a potential instability that follows from a maturity mismatch of assets and liabilities. The authors analyze the impact of interbank lending on the stability of the financial sector and find that an interbank market stabilizes the economy during normal times but amplifies systemic instability, contagion and bankruptcy cascades during crises. But even with no interbank market, indirect contagion can lead to bankruptcy cascades. The authors also find that the existence of large banks threatens stability and that regulatory policy should target large banks more strictly than small.
Subjects: 
financial instability
agent-based macroeconomics
stock-flow consistency
disequilibrium analysis
Basel II
JEL: 
C63
E42
E51
G01
Persistent Identifier of the first edition: 
Creative Commons License: 
http://creativecommons.org/licenses/by/3.0/
Document Type: 
Article

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