Browsing by Subject "General equilibrium model"

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    Endogenous bank regulation and supervision: long term implications
    (Elsevier Inc., 2024-01-09) Karakoyun, O. K.; Karakaplan, M. U.; Neyaptı, Bilin
    The role of bank regulation and supervision (RS) on financial stability and welfare has been subject to ongoing research, especially since the Great Recession. RS is expected to help eliminate the adverse selection and moral hazard problems that are abundant in financial transactions. In this paper, we present a general equilibrium model that is augmented by either a bank regulatory and supervisory agent who chooses the level of RS by maximizing bank profits, or by a macroprudential agent who minimizes non-performing loans (NPL). We compare the long-term outcomes of these scenarios and show that minimizing NPL is feasible for a larger and economically more viable range of parameter values than the alternatives. Moreover, for a comparable set of parameter combinations, the optimal choice of RS that minimizes NPL leads to both higher levels of steady state income and lower interest spreads as compared to RS that maximizes bank profits.
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    A simple dynamic applied general equilibrium model of a small open economy: transitional dynamics and trade policy
    (Economic Research Institute, 1998) Diao, X.; Yeldan, E.; Roe, T. L.
    A dynamic general equilibrium model of a small open economy is presented to investigate the transition properties of out-of-steady state growth paths in response to trade policy shocks. With the application of the so-called Armingtonian commodity system of static CGE models, we quantify the nature of the transition path and the convergence speed towards the respective steady state under alternative parametrization of the substitution elasticities and of trade policy instruments.