Raphael Solomon - Latest
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April 15, 2006
Issues in Inflation Targeting: A Summary of the Bank of Canada Conference Held 28-29 April 2005
The Bank of Canada's 2005 conference focused on two critical issues: price-level targets versus inflation targets, and the appropriate level of inflation. Session topics included new methodological approaches to examining the validity of the New Keynesian Phillips curve for Canada; the monetary policy implications of border effects and the financial-accelerator model; the zero lower bound on nominal interest rates; and inflation and welfare in general-equilibrium macroeconomic models. A panel of invited speakers discussed the issues of each session, and two distinguished speakers gave their perspectives on inflation. -
Ownership Concentration and Competition in Banking Markets
Many countries prohibit large shareholdings in their domestic banks.The authors examine whether such a restriction restrains competition in a duopolistic loan market. Blockholders may influence managers' output decisions by choosing capital structure, as in Brander and Lewis (1986). -
Are Currency Crises Low-State Equilibria? An Empirical, Three-Interest-Rate Model
Suppose that the dynamics of the macroeconomy were given by (partly) random fluctuations between two equilibria: "good" and "bad." -
Pocket Banks and Out-of-Pocket Losses: Links between Corruption and Contagion
The author describes a model with a corrupt banking system, in which bankers knowingly lend at market interest rates to back projects riskier than the market rate indicates. -
Educational Spillovers: Does One Size Fit All?
In a search model of production, where agents accumulate heterogeneous amounts of human capital, an individual worker's wage depends on average human capital in the searching population. -
When Bad Things Happen to Good Banks: Contagious Bank Runs and Currency Crises
The author develops a twin crisis model featuring multiple banks. -
Anatomy of a Twin Crisis
The author presents a model of a twin crisis, in which foreign and domestic residents play a banking game. Both "honest" and run equilibria of the post-deposit subgame exist; some run equilibria lead to a currency crisis, as agents convert domestic currency to foreign currency.