Home » A Simple Model of an International Lender of Last Resort by Haizhou Huang
A Simple Model of an International Lender of Last Resort Haizhou Huang

A Simple Model of an International Lender of Last Resort

Haizhou Huang

Published April 1st 2000
ISBN : 9781281312334
ebook
15 pages
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 About the Book 

The frequency and magnitude of bank crises has increased in recent decades. Most of these, e.g., the Japanese banking crisis, the Scandinavian banking crises, the US S&L episode have been primarily domestic, and have been resolved by variousMoreThe frequency and magnitude of bank crises has increased in recent decades. Most of these, e.g., the Japanese banking crisis, the Scandinavian banking crises, the US S&L episode have been primarily domestic, and have been resolved by various domestic measures. Several of these involved the Central Bank (CB) in Lender of Last Resort (LOLR) mode. In this context, we developed a model of LOLR (Goodhart and Huang, 1999), which sought to examine the benefits and costs of LOLR in a closed economy in both a static and a dynamic system. In the latter dynamic version, both moral hazard and contagion risks were time varying.