Creator

• Smith, Bruce D. (Bruce David), 1954-2002

Series

• Working paper (Federal Reserve Bank of Minneapolis. Research Department)

Issue number

• 202

Date created

• 1982-10

Abstract

• A model of credit rationing based on asymmetrically informed borrowers and lenders is developed. In this context, sufficient conditions are derived for an appropriate government policy response to credit rationing to be a continuously open discount window. It is also demonstrated that such a policy can be deflationary, and that given a commitment to operate in this way, the monopoly issue of liabilities can Pareto dominate their competitive issuance.

Subject (JEL)

• E51 - Money Supply; Credit; Money Multipliers
• H81 - Governmental Loans; Loan Guarantees; Credits; Grants; Bailouts
• D82 - Asymmetric and Private Information; Mechanism Design

Keyword

• Credit limit
• Government loans
• Federal lending
• Assymetric information
• Jaffee-Russel model

Date modified

• 07/11/2019

Corporate Author

• Federal Reserve Bank of Minneapolis. Research Department

Publisher

• Federal Reserve Bank of Minneapolis

Resource type

• Research Paper

License

• Creative Commons BY-NC Attribution-NonCommercial 4.0 International

In Collection:

• Working Papers

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