Replication data for: Banking, Liquidity, and Bank Runs in an Infinite Horizon Economy

Principal Investigator(s): View help for Principal Investigator(s) Mark Gertler; Nobuhiro Kiyotaki

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Project Citation:

Project Description

Summary: We develop an infinite horizon macroeconomic model of banking that allows for liquidity mismatch and bank runs. Whether a bank run equilibrium exists depends on bank balance sheets and an endogenous liquidation price for bank assets. While in normal times a bank run equilibrium may not exist, the possibility can arise in recessions. A run leads to a significant contraction in intermediation and aggregate economic activity. Anticipations of a run have harmful effects on the economy even if the run does not occur. We illustrate how the model can shed light on some key aspects of the recent financial crisis. (JEL E23, E32, E44, G01, G21, G33)

Scope of Project

JEL Classification:
      E23 Production
      E44 Financial Markets and the Macroeconomy
      G01 Financial Crises
      G21 Banks • Depository Institutions • Micro Finance Institutions • Mortgages
      G33 Bankruptcy • Liquidation
      E32 Business Fluctuations • Cycles

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Published Versions

V1 [2019-08-02]

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DDI 2.5

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