bank runs liquidity costs and investment distortions abstract in this paper we extend the diamond and dybvig 1983 model of intermediation to study further the conditions under which bank runs can occur and to consider how private parties might adjust to the existence of bank run equilibria we provide weaker necessary conditions for runs we then characterize how banks respond to the possibility of runs in their design of deposit contracts and investment decisions banks might choose to offer contracts that prevent runs but under some conditions the second best contracts will involve accepting some risk of runs in order to achieve higher expected returns from their investments

implementing efficient allocations in a model of financial intermediation abstract in a finite trader version of the diamond and dybvig j polit econ 91 1983 401 model the ex ante efficient allocation is implementable by a direct mechanism i e each trader announces the type of his own ex post preference in which truthful revelation is the strictly dominant strategy for each trader when the model is modified by formalizing the sequential service constraint cf wallace fed reserve bank minneapolis quart rev 12 1988 3 the truth telling equilibrium implements the symmetric ex ante efficient allocation with respect to iterated elimination of strictly dominated strategies

bank runs and investment decisions revisited we examine how the possibility of a bank run affects the deposit contract offered and the investment decisions made by a competitive bank cooper and ross 1998 have shown that when the probability of a run is small the bank will offer a contract that admits a bank run equilibrium we show that in this case the bank will chose to hold an amount of liquid reserves exactly equal to what withdrawal demand will be if a run does not occur in other words precautionary or excess liquidity will not be held this result allows us to determine how the possibility of a bank run affects the level of illiquid investment chosen by a bank we show that when the cost of liquidating investment early is high the level of investment is decreasing in the probability of a run however when liquidation costs are moderate the level of investment is actually increasing in the probability of a run

temporary boycotts as self fulfilling disruptions of markets abstract this paper demonstrates how equilibrium involving anticipated boycotts and actual boycotts can occur even though consumers are negligible and only care about the price they pay and the timing of purchase the model is a two period durable goods monopoly game with demand uncertainty first a non boycott equilibrium is characterized under regularity assumptions ruling out multiplicative uncertainty there are additional equilibria in which the firm sets a low price in period 0 based on the anticipation that consumers will boycott whenever the price exceeds a threshold also the augmented game with a publicly observed sunspot has equilibria in which boycotts occur on the equilibrium path with positive probability

bank runs and institutions the perils of intervention we study ex post efficient policy responses to a run on the banking system and the ex ante incentives these responses create we show that the efficient response to a run is typically not to freeze all remaining deposits since doing so imposes heavy costs on some individuals instead once a run is underway benevolent government institutions would allow additional deposit withdrawals placing further strain on the banking system when depositors anticipate these extra withdrawals their incentive to participate in the run increases in fact ex post efficient interventions can generate the conditions necessary for a self fulfilling run to occur jel g21 g8

demand deposit contracts and bank runs with present biased preferences abstract this paper extends the diamond dybvig model of bank runs by incorporating hyperbolic discounting the main question is how consumers myopic decisions affect the possibility of a bank run and the bank s optimal contract under hyperbolic discounting consumers deposit preferences differ from their withdrawal preferences therefore the bank needs to consider two separate preferences when designing the optimal banking contract making it more difficult to design a run safe banking contract this difference in preferences could increase the possibility of a bank run in equilibrium although the bank can design a run proof contract the ex ante welfare through banking services will be lower under hyperbolic discounting due to its tighter incentive compatibility constraint

pre play research in a model of bank runs se estudia un modelo de corrida bancaria en el que los depositantes no llegaron a un consenso sobre la accion a elegir pero pueden informarse acerca de las intenciones de los otros jugadores la propiedad de equilibrio indeterminado reaparece en el juego con adquisicion de informacion en el escenario bajo analisis el equilibrio con niveles positivos de adquisicion de informacion resulta en mayores probabilidades de quiebra del banco la correlacion en las senales aumenta el espacio de parametros para el cual existen equilibrios con niveles positivos de adquisicion de informacion y mayor probabilidad de quiebra del banco

population aging and carbon emissions in oecd countries accounting for life cycle and cohort effects this paper investigates the relationship between emissions of carbon dioxide and the ongoing process of demographic transition in oecd countries our research is motivated by suggestions in the literature that emission relevant consumption patterns may depend on the position in the life cycle and on the birth cohort to which people belong we augment standard macroeconomic emission regressions by including the age and cohort composition of the population our estimation results on a panel of data for 26 countries spanning the period 1960 2005 suggest that both life cycle and cohort effects belong in a macroeconomic emission function for carbon dioxide we find that shifts in both the age and the cohort composition have contributed to rising carbon emissions in oecd countries

reconciling bagehot and the fed s response to september 11 bagehot 1873 states that to prevent bank panics a central bank should provide liquidity at a very high rate of interest in contrast most of the theoretical literature on liquidity provision suggests that central banks should lend at an interest rate of zero this is broadly consistent with the federal reserve s behavior in the days following september 11 2001 this paper shows that both policies can be reconciled with commodity money as in bagehot s time liquidity is scarce and a high price allows banks to self select in contrast the fed has a virtually unlimited ability to temporarily expand the money supply so self selection is unnecessary

co2 emissions renewable energy and the environmental kuznets curve a panel cointegration approach abstract this study combines a panel cointegration analysis with a set of robustness tests to assess the short and long run impacts of renewable energy on co2 emissions as well as the kuznets environmental curve hypothesis for 25 selected african countries over the period 1980 2012 the results provide no evidence of a total validation of ekc predictions however co2 emissions are found to increase with income per capita the overall estimations strongly reveal that renewable energy with a negative effect on co2 emissions coupled with an increasing long run effect remains an efficient substitute for the conventional fossil fuelled energy nonetheless the impact of renewable energy is outweighed by primary energy consumption in both the short and long run entailing more global synergy for outpacing the environmental challenges

financial fragility and over the counter markets abstract this paper studies the interaction between financial fragility and over the counter otc markets i model the financial sector as a large number of investors divided into different groups which i interpret as financial institutions and a large number of dealers financial institutions and dealers trade assets in an otc market a la duffie et al 2005 and lagos and rocheteau 2009 investors receive privately observed preference shocks and financial institutions use the balanced team mechanism proposed by athey and segal 2013 to implement an efficient risk sharing arrangement among their investors when the market is liquid in the sense that search and bargaining are small frictions i show that the economy is likely to have a unique equilibrium and therefore is not fragile when these frictions are severe a run equilibrium exists investors announce low valuation of assets because they believe everyone else in their financial institution is doing the same conditional on bank runs existing the welfare impact of the search friction is ambiguous during runs trade is inefficient and as a result a friction that reduces trade during runs has the potential to improve welfare this result is in sharp contrast with the existing literature which suggests that search friction has a negative impact on welfare

the role of independence in the green lin diamond dybvig model abstract green and lin study a version of the diamond dybvig model with a finite number of agents independence independent determination of each agent s type and sequential service for special preferences they show that the ex ante first best allocation is the unique equilibrium outcome of the model with private information about types via a simple argument it is shown that uniqueness of the truth telling equilibrium holds for general preferences and in particular for a constrained efficient allocation whether first best or not the crucial assumption is independence

impact of marginal and intergenerational effects on carbon emissions from household energy consumption in china abstract as an important part of urban carbon emissions the carbon emissions from household energy consumption are increasing with the continuous improvement of chinese urbanization this study divides family population into 4 groups adolescents aged 0 17 young people aged 18 44 middle aged people aged 45 59 and elderly people aged 60 and older and develops a calculation model for carbon emissions of household energy consumption in accordance with the latest standards of the world health organization based on chinese family panel studies in 2016 results showed that the marginal and intergenerational effects coexist in various types of household energy consumption families with 3 5 people have the most economical consumption scale and the largest marginal sharing effect multigenerational families or families with a large proportion of middle aged and older people are beneficial in reducing household energy consumption this paper suggests it is important to fully consider the impact of the intergenerational effect marginal effect and cultural shock caused by the electronic information age on household energy consumption when formulating standards of household energy consumption

banking crises and liquidity in a monetary economy abstract this study investigates banks liquidity provision using the lagos and wright model of monetary exchange with aggregate uncertainty we show that banks sometimes exhaust their cash reserves and fail to satisfy their depositors needs for consumption smoothing we also show that banking crises can be eliminated by a rate of return equalizing policy under perfect risk sharing but the first best outcome can be only achieved with the friedman rule these results cannot be obtained with other monetary models e g overlapping generations models we also derive a rich array of non trivial effects of inflation on equilibrium deposits the probability of banking crises and banks portfolios

bank incentives contract design and bank runs abstract we study the diamond dybvig bank runs deposit insurance and liquidity j polit econ 91 1983 401 419 model as developed in green and lin implementing efficient allocations in a model of financial intermediation j econ theory 109 2003 1 23 and peck and shell equilibrium bank runs j polit econ 111 2003 103 123 we dispense with the notion of a bank as a coalition of depositors instead our bank is a self interested agent with a technological advantage in record keeping we examine the implications of the resulting agency problem for the design of bank contracts and the possibility of bank run equilibria for a special case we discover that the agency problem may or may not simplify the qualitative structure of bank liabilities we also find that the uniqueness result in green and lin implementing efficient allocations in a model of financial intermediation j econ theory 109 2003 1 23 is robust to our form of agency but that the non uniqueness result in peck and shell equilibrium bank runs j polit econ 111 2003 103 123 is not

a bank runs model with a continuum of types abstract we consider a bank runs model a la diamond and dybvig 1983 3 with a continuum of agent types indexed by the degree of patience much of our understanding based on the two type model must be modified the endogenous determination of a cutoff type is central to the analysis in the case where the bank can credibly commit to a contract the optimal contract results in socially excessive early withdrawals in every equilibrium of the post deposit subgame thus even at the best equilibrium the socially efficient outcome is not achieved and agents behavior exhibits features of a bank run in the case where commitment is not possible there are strictly more early withdrawals and strictly lower welfare than the full commitment equilibrium

banking panics and policy responses we study how banking panics unfold in av ersion of the diamond and dybvig 1983 model with limited commitment as is well known the banking authority could eliminate the possibility of a run on the banking system by committing to suspend payments to depositors if a run were to start once a run is under way however the banking authority will choose to reschedule rather than suspend payments we construct equilibria in which depositors run on the banking system with positive probability and we show that an equilibrium bank run in this setting is necessarily partial with only some depositors participating we also show that a run naturally occurs in waves with each wave of withdrawals prompting a further policy response from the banking authority the number of waves that occur in equilibrium is stochastic and can be arbitrarily large

evaluating theories of bank runs with heterogeneity restrictions this paper empirically tests theories of bank runs we use a structural panel var to extract runs from deposit market data identification exploits cross sectional heterogeneity in deposit insurance we identify bank runs as adverse deposit market supply shocks hitting uninsured banks harder compared to insured conditional on a run we study the behavior of uninsured banks with bad and good fundamentals we find that both experience runs but deposit outflows at the former are more severe panic effects which affect all uninsured deposits alike irrespective of fundamentals dominate in the aggregate insured banks partially absorb the outflow of uninsured deposits

environmental and distributional impacts of conservation targeting strategies abstract resource purchasing funds have become a major tool for environmental protection and resource conservation these funds use various strategies to target resources for conservation the choice of which may lead to striking differences in environmental performance this paper develops an analytical framework to analyze the impact of alternative targeting strategies on different interest groups including consumers producers labor and environmentalists we show that ignoring the output price effect of purchasing funds reduces environmental gain and in some cases may make a purchasing fund counterproductive and we argue that the optimal design of targeting criteria must consider the price feedback effect

bank runs as an equilibrium phenomenon a standard demand deposit contract in which individuals are entitled to their full deposit at any time provided the bank is solvent is analyzed in a context in which there are no exogenous events on which agents condition their behavior and a unique equilibrium involving a bank run with positive probability is shown to exist

efficiency equity tradeoffs and the scope for resource reallocation in agricultural research evidence from nigeria on the basis of projected economic and poverty impacts of alternative commodity research programs this article assessed efficiency and equity tradeoffs and the scope for research resource reallocation in nigeria given the importance of major food staples to both poor and nonpoor households in production and consumption introducing a poverty dimension revealed no significant shift in priorities compared with those implied by efficiency the results showed that neither the additional benefits to the poor nor the foregone benefits to society are significant from prioritizing research according to equity relative to efficiency criteria as current priorities are supported by neither efficiency nor equity criteria however there is considerable scope for maximizing research benefits to the poor through informed reallocation of research resources the article concludes with a discussion of the patterns of resource reallocations implied by efficiency and equity criteria

bank run psychology abstract banks are inherently susceptible to panics and bank runs due to the problem of maturity mismatch resulting in both a stable equilibrium in which the bank survives and an unstable equilibrium in which a bank run occurs understanding equilibrium selection in this setting is extremely important for safeguarding financial stability in this paper one new potential factor that determines whether a bank runs gets triggered or not is experimentally studied namely the psychological state of the depositor prior to participating in an experimental bank run game subjects are either induced with fear sadness or happiness using an autobiographical emotion induction task the findings suggest that the presence of background fear significantly increases the likelihood of withdrawal and a subsequent bank run in addition women are shown to be significantly more likely to withdraw then men but only in the fear induction treatment

currency elasticity and banking panics theory and evidence existing models of banking panics contain no role for monetary factors and fail to explain why some banking systems experienced panics while others did not a monetary model is constructed where seasonal variations in the demand for liquidity and credit play a critical role in generating banking panics these panics occur when there are restrictions on the issue of currency in private banks but they do not occur if banks are unrestricted empirical evidence from canada and the united states for the period 1880 1910 is largely consistent with the predictions of the model

bank runs as coordination failures an experimental study we use experimental methods to investigate what factors contribute to breakdowns in coordination among a bank s depositors subjects in our experiment decide whether to leave their money deposited in a bank or withdraw it early a bank run occurs when there are too many early withdrawals we explore the effects of adding uncertainty about fundamental withdrawal demand and of changing the number of opportunities subjects have to withdraw our results show that i bank runs are rare when fundamental withdrawal demand is known but occur frequently when it is stochastic and ii subjects are more likely to withdraw when given multiple opportunities to do so than when presented with a single decision for the multiple opportunity case we evaluate individual withdrawal decisions according to a set of simple cutoff rules we find that the cutoff rule corresponding to the payoff dominant equilibrium of the game which involves bayesian updating of probabilities explains subject behavior better than other rules

money intermediation and banking the business of money creation is conceptually distinct from that of intermediation yet these two activities are frequently but not always combined together in the form of a banking system we develop a simple model to examine the question when is banking essential there is a role for money due to a lack of record keeping and a role for intermediation due to the existence of private information both money and intermediation are essential when monitoring costs associated with intermediation are sufficiently low the two activities can be separated from one another however when monitoring costs are sufficiently high a banking system that combines these two activities is essential

contagious development neighbor interactions in deforestation article i nfo we estimate neighbor interactions in deforestation in costa rica to address simultaneity and the presence of spatially correlated unobservables we measure for neighbors deforestation using the slopes of neighbors and neighbors neighbors parcels we find that neighboring deforestation significantly raises the probability of deforestation policies for agricultural development or forest conservation in one area will affect deforestation rates in non targeted neighboring areas correct estimation of the interaction reverses the naive estimate s prediction of multiple equilibria

banking crises in monetary economies this paper analyzes the effect of inflation on banking crises in a model in which money and banks play essential roles the model s equilibrium replicates some key features of actual banking crises namely the partial suspension of payments and the desire to hold cash even in the absence of pressing liquidity needs when banks have access to a stable foreign currency inflation has a threshold effect on banking crises higher inflation reduces the likelihood of crises when inflation is below the threshold the reverse happens when inflation exceeds the threshold this result appears to be broadly consistent with available evidence jel category e40 e50

optimal diamond dybvig mechanism in large economies with aggregate uncertainty abstract this paper characterizes the direct mechanism which implements the constrained optimal outcome in a version of diamond and dybvig 1983 with aggregate uncertainty and a continuum of agents using this result numerical examples where the best direct mechanism has a bank run equilibrium are easily obtained

a model of financial fragility abstract this article presents a dynamic stochastic game theoretic model with two essential features first agents hold diversified portfolios that link their financial positions to those of other agents second shocks to fundamentals at the initial date cause some portfolio losses agents who incur losses reallocate their portfolios thereby breaking some linkages in the pareto efficient symmetric equilibrium studied two related types of financial crisis can occur in response one occurs gradually as losses spread breaking more links the other type occurs instantaneously when forward looking agents preemptively shift to safer portfolios to avoid future losses from contagion an economy is more fragile the earlier its last remaining link breaks from such a crisis journal of economic literature classification numbers c7 e00 e3 e44 g1

deposit competition and financial fragility evidence from the us banking sector preliminary and incomplete please do not cite without permission we develop and estimate an empirical model of the u s banking sector using a new data set covering the largest u s banks over the period 2002 2013 our model incorporates insured depositors and run prone uninsured depositors who have rich preferences over dierentiated banks banks compete for deposits in the spirit of matutes and vives 1996 and can endogenously default we estimate demand for uninsured

interest rates and financial fragility abstract how do the interest rates banks earn on their assets affect the susceptibility of the banking system to a self fulfilling run by depositors i study this question in a version of the model of diamond and dybvig 1983 with limited commitment and a non trivial portfolio choice i show that the relationship between these interest rates and financial fragility is often non monotone for example a small increase in the return on illiquid investment or a small increase in the term premium may raise banks susceptibility to a run while a larger increase would make the banking system more stable the same is true for changes in short term rates holding the longer term rates fixed i provide a precise characterization of these comparative statics of financial fragility

run equilibria in the green lin model of financial intermediation abstract we study the green lin model of financial intermediation e j green p lin implementing efficient allocations in a model of financial intermediation j econ theory 109 2003 1 23 under a more general specification of the distribution of types across agents we derive the efficient allocation in closed form we show that in some cases the intermediary cannot uniquely implement the efficient allocation using a direct revelation mechanism in these cases the mechanism also admits an equilibrium in which some but not all agents run on the intermediary and withdraw their funds regardless of their true liquidity needs in other words self fulfilling runs can arise in a generalized green lin model and these runs are necessarily partial with only some agents participating

the role of demandable debt in structuring optimal banking arrangements demandable debt finance by banks warrants explanation because it entails costs of bank suspension liquidation and idle reserve holdings an explanation is developed in which demandable debt provides incentive compatible intermediation where the banker has comparative advantage in allocating investment funds but may act against the interests of uninformed depositors demandable debt attracts funds by giving depositors an option to force liquidation its usefulness in transacting follows from information sharing between monitors and nonmonitors copyright 1991 by american economic association

inequality and financial fragility abstract i study how the distribution of wealth influences the government s response to systemic banking crises and shapes financial fragility distributional concerns tend to make full government guarantees of deposits credible for relatively poor individuals but not for wealthier individuals as a result wealthier individuals have a stronger incentive to panic and in equilibrium the institutions in which they invest are endogenously more likely to experience runs and receive partial bailouts even under utilitarian government moreover the shape of the wealth distribution affects the level of financial fragility recognizing this fact may alter the government s desire to redistribute wealth ex ante

residential energy consumption in urban china a decomposition analysis abstract residential energy consumption rec is the second largest energy use category 10 in china and urban residents account for 63 of the rec understanding the underlying drivers of variations of urban rec thus helps to identify challenges and opportunities and provide advices for future policy measures this paper applies the lmdi method to a decomposition of china s urban rec during the period of 1998 2007 at disaggregated product activity level using data collected from a wide range of sources our results have shown an extensive structure change towards a more energy intensive household consumption structure as well as an intensive structure change towards high quality and cleaner energy such as electricity oil and natural gas which reflects a changing lifestyle and consumption mode in pursuit of a higher level of comfort convenience and environmental protection we have also found that china s price reforms in the energy sector have contributed to a reduction of rec while scale factors including increased urban population and income levels have played a key role in the rapid growth of rec we suggest that further deregulation in energy prices and regulatory as well as voluntary energy efficiency and conservation policies in the residential sector should be promoted

efficiency equity tradeoffs in targeting payments for ecosystem services this article develops an analytic framework to analyze the tradeoff between economic efficiency and distributional equity in targeting payments for ecosystem services pes it also proposes an empirical procedure to trace out the efficiency equity frontier where the program is pareto optimal in the sense that it cannot be improved upon to achieve either higher efficiency or distributional equity without compromising the other we apply the procedure to the conservation reserve program crp the largest pes program in u s history to analyze a whether it is possible to improve both the efficiency and the distributional equity of the program and b what the choice made by crp administrators implies about the political economic balance results reveal that a crp administrators forfeited about 9 of efficiency for an 18 23 improvement in distributional equity depending on the equity indicator used in the eighteenth signup of the crp b reducing the maximum allowable rental rate for all contracts would improve efficiency at the cost of distributional equity c reducing the maximum county enrollment cap would reduce efficiency without generating much improvement in distributional equity and d the crp targeting criterion could be redesigned to achieve both higher efficiency and higher distributional equity

habitat and open space at risk of land use conversion targeting strategies for land conservation funds available to purchase land and easements for conservation purposes are limited this article provides a targeting strategy for protecting multiple environmental benefits that includes heterogeneity in land costs and probability of land use conversion by incorporating spatially explicit land use change and hedonic price models this strategy is compared to two alternative strategies that omit either land cost or conversion threat based on dynamic programming and monte carlo simulations with alternating periods of conservation and development we demonstrate that the positive correlation between land costs and probability of land use conversion affects targeting efficiency using parcel data from sonoma county california

economic growth liquidity and bank runs abstract we construct an endogenous growth model in which bank runs occur with positive probability in equilibrium in this setting a bank run has a permanent effect on the levels of the capital stock and of output in addition the possibility of a run changes the portfolio choices of depositors and of banks and thereby affects the long run growth rate these facts imply that both the occurrence of a run and the mere possibility of runs in a given period have a large impact on all future periods a bank run in our model is triggered by sunspots and we consider two different equilibrium selection rules in the first a run occurs with a fixed exogenous probability while in the second the probability of a run is influenced by banks portfolio choices we show that when the choices of an individual bank affect the probability of a run on that bank the economy both grows faster and experiences fewer runs

equivalence between the diamond dybvig banking model and the optimal income taxation model abstract it is shown that the diamond dybvig journal of political economy 96 1983 768 banking model with a continuum of types of agents has the same analytical structure as the standard optimal income taxation model review of economic studies 38 1971 175 review of economic studies 43 1976 261 insights from the income taxation literature immediately imply that a bank run equilibrium exists in the banking model as long as the long term project is sufficiently costly to liquidate

on freezing depositor funds at financially distressed banks an experimental analysis this article reports an experiment conducted to evaluate the effects of alterations in the terms of repayments to depositors following a liquidity suspension as well as the effect of alterations in the publicity of information about withdrawal behavior on the fragility of distressed banks results indicate that a tough renegotiation stance of protecting depositors who maintain their money in the bank can quite effectively promote stability information provided to depositors regarding past withdrawal behavior weakens the effectiveness of a tough renegotiation policy but reduces fragility somewhat for a more lenient rescheduling condition

dynamic debt runs we develop a dynamic model of debt runs on a rm which invests in an illiquid asset by rolling over staggered short term debt contracts i e dierent contracts mature at dierent times we derive a unique threshold equilibrium in which creditors coordinate their asynchronous rollover decisions based on the rm s publicly observable and time varying fundamental the coordination problem ampli es the creditors concerns about the rm s future rollover risk created by its time varying fundamental and causes each maturing creditor to run ahead of others even when the current fundamental is substantially higher than its liability our model provides a set of implications on the roles played by volatility illiquidity and debt maturity in driving debt runs as well as on rms capital adequacy standards and credit risk

china s carbon emissions from urban and rural households during 1992 2007 in china rapid economic growth has stimulated fast urban expansion and rural household income and consumption expenditure in current paper an input output method is used to determine the impact of china s increased urban and rural household consumption on carbon emissions the results shows that the direct and indirect co 2 emission from household consumption accounted for more than 40 of total carbon emissions from primary energy utilization in china in 1992 2007 the population increase expansion of urbanization and the increase of household consumption per capita all contribute to an increase of indirect carbon emissions while carbon intensity decline mitigates the growth of carbon emissions therefore at the domestic level household consumption is of great significance for co 2 emission which could be mitigated through changing the composition of goods and services consumed by households and switching to consumption pattern of less carbon intensive products the government must consider the substantial contribution of household consumption to carbon emissions when china is encouraging consumption in order to address the current global financial crisis c 2011 elsevier ltd all rights reserved

experimental evidence of bank runs as pure coordination failures abstract we investigate how coordination requirement measured by the coordination parameter affects the occurrence of miscoordination based bank runs in controlled laboratory environments we identify an indeterminacy region of the coordination parameter such that games with the parameter within the region have varying coordination outcomes and exhibit persistent path dependence experimental economies with the parameter above below the region stay close or converge to the run non run equilibrium switches between the two equilibria occur even with fixed economic fundamentals the experimental results are well accounted for by a version of the evolutionary algorithm that uses experimentation rates estimated from the experimental data

income inequality and carbon dioxide emissions the case of chinese urban households abstract this paper draws on chinese survey data to investigate variations in carbon dioxide emissions across households with different income levels rich households generate more emissions per capita than poor households via both their direct energy consumption and their higher expenditure on goods and services that use energy as an intermediate input an econometric analysis confirms a positive relationship between emissions and income and establishes a slightly increasing marginal propensity to emit mpe over the relevant income range the redistribution of income from rich to poor households is therefore shown to reduce aggregate household emissions suggesting that the twin pursuits of reducing inequality and emissions can be achieved in tandem

liquidity uncertainty and intermediation the paper performs a welfare comparison between demand deposit and equity contracts in the presence of intrinsic aggregate uncertainty in this framework the welfare dominance of deposit contracts emerges under corner preferences it is shown that aggregate uncertainty creates high price volatility of ex dividend equity claims traded in a secondary market and the resulting consumption allocations offer less risk sharing opportunities to risk averse consumers than tailor made deposit contracts the contingency of early payoffs on depositors withdrawal order reinforces the welfare performance of deposit contracts whereas costly liquidation of productive long term investments deteriorates their welfare performance relative to equity contracts

on the effects of deposit insurance and observability on bank runs an experimental study we study the effects of deposit insurance and observability of previous actions on the emergence of bank runs by means of a controlled laboratory experiment we consider three depositors in the line of a bank who decide between withdrawing or keeping their money deposited we have three treatments with different levels of deposit insurance which reflect the losses a depositor may incur in the case of a bank run we find that different levels of deposit insurance and the possibility of observing other depositors actions affect the likelihood of bank runs when decisions are not observable higher levels of deposit insurance decrease the probability of bank runs when decisions are observable this need not to be the case these results suggest that i observability might be considered as a partial substitute of deposit insurance and ii the optimal deposit insurance should take into account the degree of observability

deposit contract design with relatively partially honest agents abstract the efficient outcome of a deposit contract model is uniquely implementable with relatively partially honest agents while it is never uniquely implementable only with materially self interest agents

equilibrium bank runs we analyze a banking system in which the class of feasible deposit contracts or mechanisms is broad the mechanisms must satisfy a sequential service constraint but partial or full suspension of convertibility is allowed consumers must be willing to deposit ex ante we show by examples that under the so called optimal contract the postdeposit game can have a run equilibrium given a propensity to run triggered by sunspots the optimal contract for the full predeposit game can be consistent with runs that occur with positive probability thus the diamond dybvig framework can explain bank runs as emerging in equilibrium under the optimal deposit contract

banks and markets in a monetary economy abstract modern financial sectors consist of banks asset markets and a central bank this paper builds a model where these institutions provide different financial services and their interaction supports efficient allocations when one institution is missing equilibria are by construction inefficient the paper analyzes how interest rates and asset prices depend on the structure of the financial sector and characterizes the central bank policy that supports efficient allocations the analysis relies on the difference between liquidity and real shocks and relates the notion of liquidity used in this paper to the one adopted in other studies

the equity efficiency trade off in environmental policy evidence from stated preferences the design of environmental policy raises several equity issues in particular the distribution of benefits and costs at the same time it has often been argued that there is a trade off in environmental policy between equity and efficiency which brings these issues firmly to the attention of environmental economics in this paper we use a simple choice experiment to elicit individual preferences over equity efficiency trade offs in the context of two environmental problems local air pollution and global climate change we find that equity matters to people as much as efficiency does in the design and delivery of environmental policy

an experimental exploration of self fulfilling banking panics their occurrence persistence and prevention this article tests the possibility and the degree of persistence of self fulfilling banking panics through an experimental protocol panics are proved to be persistent phenomena that are difficult to prevent however it seems possible to curb them through a learning effect caused by a temporary but sufficient suspension of the deposit availability combined with a narrow banking solution which makes banks more liquid additionally panic prevention requires a full deposit coverage to be effective this suggests that the moral hazard issue should not be tackled through a lower deposit coverage especially in emerging countries banking systems where depositors are likely to lose confidence

bailouts and financial fragility how does the belief that policymakers will bail out investors in the event of a crisis affect the allocation of resources and the stability of the financial system i study this question in a model of financial intermediation with limited commitment when a crisis occurs the efficient policy response is to use public resources to augment the private consumption of those investors facing losses the anticipation of such a bailout distorts ex ante incentives leading intermediaries to choose arrangements with excessive illiquidity and thereby increasing financial fragility prohibiting bailouts is not necessarily desirable however it induces intermediaries to become too liquid from a social point of view and may in addition leave the economy more susceptible to a crisis a policy of taxing short term liabilities in contrast can correct the incentive problem while improving financial stability

could making banks hold only liquid assets induce bank runs abstract restrictions placed on bank portfolios are analyzed in a banking model designed to capture the role of checking accounts in facilitating transactions forcing banks to hold only liquid assets creates the incentive for liquidity based runs even when a run does not occur welfare is reduced as a result of overinvestment in the liquid asset

the economics of a public fund for environmental amenities a study of crp contracts the problem of targeting crp purchases to buy environmental amenities under productivity and environmental heterogeneity is considered gini coefficients and lorenz curves are used to measure the effectiveness of spending under alternative targeting criteria the environmental benefits considered are water erosion wind erosion surface water quality and wildlife habitat the three alternative targeting criteria examined include purchasing land according to i the benefit to cost ratio ii the level of benefits and iii the level of cost results indicate that the degree of variability and correlation determine the extent to which suboptimal targeting achieves a significant portion of available environmental benefits