Bank recapitalisation is a ‘powerful’ policy instrument, paper suggests
Economy likely to remain in an ‘anaemic state’ until certain conditions met
Bank recapitalisations are more effective than fiscal expansions in restoring aggregate demand after a banking crisis, a working paper published by the Netherlands Bank suggests.
In A descriptive model of banking and aggregate demand, Jochen Mierau and Mark Mink integrate a banking sector into a macroeconomic framework to offer new explanations of the developments around the recent financial crisis.
The authors find bank recapitalisation can be a particularly "powerful" policy instrument to
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