Crisis financieras y efectividad de la política de prestamista de última instancia : un modelo de equilibrio general dinámico para el caso colombiano

Torres, Alejandro; Rhenals, Remberto; Gómez, Wilman

Crisis financieras y efectividad de la política de prestamista de última instancia : un modelo de equilibrio general dinámico para el caso colombiano

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Revista Ensayos Sobre Política Económica; Vol. 28. No. 61. Agosto, 2010. Pág.: 272-306.

Date published

2010-08-01

Date

2010-08

Authors

Torres, Alejandro
Rhenals, Remberto
Gómez, Wilman

ISSN

0120-4483

Document language

spa

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The opinions contained in this document are the sole responsibility of the author and do not commit Banco de la República or its Board of Directors.

Abstract

The current global financial crisis, which unfolded in the US during 2008, has put the importance of the financial system in the economy, the potential economic policies available to support it and their short and long term implications back into the academic and political debate. This article explores the possible effects of the Lender of Last Resort Policy of central banks on the process of overcoming financial crises and its implications in terms of growth. To this end, we used a customized Dynamic General Equilibrium Model which explicitly includes the financial system and the Liquidity Support policy of the central bank. The simulations have shown that this type of policy facilitates overcoming financial crises in less time, but that they also delay the economy’s readjustment in the long term and increase its volatility.

Description

The current global financial crisis, which unfolded in the US during 2008, has put the importance of the financial system in the economy, the potential economic policies available to support it and their short and long term implications back into the academic and political debate. This article explores the possible effects of the Lender of Last Resort Policy of central banks on the process of overcoming financial crises and its implications in terms of growth. To this end, we used a customized Dynamic General Equilibrium Model which explicitly includes the financial system and the Liquidity Support policy of the central bank. The simulations have shown that this type of policy facilitates overcoming financial crises in less time, but that they also delay the economy’s readjustment in the long term and increase its volatility.