Banking in computable general equilibrium economies

Javier Díaz-Giménez, Edward Prescott, Terry Fitzgerald, Fernando Alvarez

Research output: Contribution to journalArticle

61 Citations (Scopus)

Abstract

In this paper we develop a computable general equilibrium economy that models the banking sector explicitly. Banks intermediate between households and between the household sector and the government sector. Households borrow from banks to finance their purchases of houses and they lend to banks to save for retirement. Banks pool households' savings and they purchase interest-bearing government debt and non-interest-bearing reserves. We use this structure to answer two sets of questions: one normative in nature that evaluates the welfare costs of alternative monetary and tax policies, and one positive in nature that studies the real effects of following a procyclical interest-rate policy rule.

Original languageEnglish (US)
Pages (from-to)533-559
Number of pages27
JournalJournal of Economic Dynamics and Control
Volume16
Issue number3-4
DOIs
StatePublished - 1992
Externally publishedYes

Fingerprint

Bearings (structural)
General Equilibrium
Banking
Sector
Finance
Taxation
Tax
Interest Rates
Welfare
Costs
Banks
Computable general equilibrium
Evaluate
Alternatives
Household

ASJC Scopus subject areas

  • Economics and Econometrics
  • Control and Optimization

Cite this

Banking in computable general equilibrium economies. / Díaz-Giménez, Javier; Prescott, Edward; Fitzgerald, Terry; Alvarez, Fernando.

In: Journal of Economic Dynamics and Control, Vol. 16, No. 3-4, 1992, p. 533-559.

Research output: Contribution to journalArticle

Díaz-Giménez, Javier ; Prescott, Edward ; Fitzgerald, Terry ; Alvarez, Fernando. / Banking in computable general equilibrium economies. In: Journal of Economic Dynamics and Control. 1992 ; Vol. 16, No. 3-4. pp. 533-559.
@article{f47e2e6182a1416a87d0afad93834e77,
title = "Banking in computable general equilibrium economies",
abstract = "In this paper we develop a computable general equilibrium economy that models the banking sector explicitly. Banks intermediate between households and between the household sector and the government sector. Households borrow from banks to finance their purchases of houses and they lend to banks to save for retirement. Banks pool households' savings and they purchase interest-bearing government debt and non-interest-bearing reserves. We use this structure to answer two sets of questions: one normative in nature that evaluates the welfare costs of alternative monetary and tax policies, and one positive in nature that studies the real effects of following a procyclical interest-rate policy rule.",
author = "Javier D{\'i}az-Gim{\'e}nez and Edward Prescott and Terry Fitzgerald and Fernando Alvarez",
year = "1992",
doi = "10.1016/0165-1889(92)90048-J",
language = "English (US)",
volume = "16",
pages = "533--559",
journal = "Journal of Economic Dynamics and Control",
issn = "0165-1889",
publisher = "Elsevier",
number = "3-4",

}

TY - JOUR

T1 - Banking in computable general equilibrium economies

AU - Díaz-Giménez, Javier

AU - Prescott, Edward

AU - Fitzgerald, Terry

AU - Alvarez, Fernando

PY - 1992

Y1 - 1992

N2 - In this paper we develop a computable general equilibrium economy that models the banking sector explicitly. Banks intermediate between households and between the household sector and the government sector. Households borrow from banks to finance their purchases of houses and they lend to banks to save for retirement. Banks pool households' savings and they purchase interest-bearing government debt and non-interest-bearing reserves. We use this structure to answer two sets of questions: one normative in nature that evaluates the welfare costs of alternative monetary and tax policies, and one positive in nature that studies the real effects of following a procyclical interest-rate policy rule.

AB - In this paper we develop a computable general equilibrium economy that models the banking sector explicitly. Banks intermediate between households and between the household sector and the government sector. Households borrow from banks to finance their purchases of houses and they lend to banks to save for retirement. Banks pool households' savings and they purchase interest-bearing government debt and non-interest-bearing reserves. We use this structure to answer two sets of questions: one normative in nature that evaluates the welfare costs of alternative monetary and tax policies, and one positive in nature that studies the real effects of following a procyclical interest-rate policy rule.

UR - http://www.scopus.com/inward/record.url?scp=38249011498&partnerID=8YFLogxK

UR - http://www.scopus.com/inward/citedby.url?scp=38249011498&partnerID=8YFLogxK

U2 - 10.1016/0165-1889(92)90048-J

DO - 10.1016/0165-1889(92)90048-J

M3 - Article

AN - SCOPUS:38249011498

VL - 16

SP - 533

EP - 559

JO - Journal of Economic Dynamics and Control

JF - Journal of Economic Dynamics and Control

SN - 0165-1889

IS - 3-4

ER -