Communication Barriers in the Diamond-Dybvig Model: The Sequential-Service Constraint and Other Implications

 Public
Creator Series Issue number
  • 370
Date created
  • 1987-09
Abstract

  • The Diamond-Dybvig model of banking (Journal of Political Economy, 1983) is amended by introducing communication barriers - these being implicit in their model and in most explanations of why people hold so-called liquid assets. These barriers imply the sequential-service constraint that Diamond and Dybvig imposed on private intermediation and have other implications: infeasibility of the policy that Diamond and Dybvig identify with deposit insurance and desirability of dependence of the realized return on deposits on the random order of withdrawals.

Subject (JEL) Keyword Date modified
  • 05/08/2020
Corporate Author
  • Federal Reserve Bank of Minneapolis. Research Department
Publisher
  • Federal Reserve Bank of Minneapolis
Resource type DOI
License
In Collection:

Downloadable Content

Download PDF
Cite EndNote

Zipped Files

Download a zip file that contains all the files in this work.

Thumbnail Title Date Uploaded Visibility Actions
file details 19870900fedmwp370.pdf 2018-03-13 Public Download