In this paper we will consider a generalized extension of the Eisenberg-Noe model of financial contagion to allow for time dynamics in both discrete and continuous time. Derivation and interpretation of the financial implications will be provided . Emphasis will be placed on the  continuous-time framework and its formulation as a differential equation driven by the operating cash flows . Mathematical results on existence and uniqueness of firm wealths under the discrete and continuous-time models will be provided . Finally, the financial implications of time dynamics will be considered. The focus will be on how the dynamic clearing solutions differ from those of the static Eisenberg-Noe model.
In this paper we will consider a generalized extension of the Eisenberg-Noe model of financial contagion to allow for time dynamics of the interbank liabilities . Emphasis will be placed on the construction, existence, and uniqueness of the continuous-time framework and its formulation as a differential equation driven by the operating cash flows . Finally, the financial implications of time dynamics will be considered. The focus will be on how the dynamic clearing solutions differ from those of the static Eisenberg-Noe model.
R
in both discrete and continuous time. Derivation and interpretation of the financial implications will be provided
of the interbank liabilities
A
construction, existence, and uniqueness of the
D
. Mathematical results on existence and uniqueness of firm wealths under the discrete and continuous-time models will be provided