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Macro-Prudential Policy under Moral Hazard and Financial Fragility

Carlos Alberto
Arango-Arango
Oscar Mauricio
Valencia-Arana
Miércoles, 1 Abril 2015

This paper presents a DSGE model with banks that face moral hazard in management. Banks receive demand deposits and fund investment projects. Banks are subject to potential withdrawals by depositors which may force them into early liquidation of their inv