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Are financial intermediaries-in particular, banks-inherently unstable or fragile, and if so, why? We address this question theoretically by analyzing whether model economies with financial intermediation are more prone than those without it to multiple, cyclic, or stochastic equilibria. We consider several formalizations: insurance-based banking, models with reputational considerations, those with fixed costs and delegated investment, and those where bank liabilities serve as payment instruments. Importantly for the issue at hand, in each case banking arrangements arise endogenously. While the economics and mathematics differ across specifications, they all predict that financial intermediation engenders instability in a precise sense. JEL classification: D02, E02, E44, G21 Key words: banking, financial intermediation, instability, volatility, 1 Introduction This essay reviews, consolidates and extends several branches of the literature on banking. It is, in part, a survey, but it also goes beyond past work in several [...]

This paper studies economies where firms acquire capital in primary markets and then, after idiosyncratic productivity shocks, retrade it in secondary markets that incorporate bilateral trade with search, bargaining, and liquidity frictions. We distinguish between full or partial sales (one firm gets all or some of the other's capital) and document several long- and short-run empirical patterns between these variables and the cost of liquidity, as measured by inflation. Quantitatively, the model can match these patterns plus the standard business cycle facts. We also investigate the impact of search frictions, monetary and fiscal policy, persistence in shocks, and returns to scale. [ABSTRACT FROM AUTHOR]

This is part one of a two-part interdisciplinary paper that examines the various forces (discourses and institutional processes) that shape prisoner-student identities. Discourses of officers from a correctional website serve as a limited, single case study of discourses that ascribe dehumanized, stigmatized identities to "the prisoner." Two critical concepts, performative spaces and identity enclosures, are purposed as potential critical, emancipatory terms to explore the prisoner-student identity work that occurs in schools and elsewhere in prison. This paper is guided by the effort to assist teachers to act as transformative intellectuals in prisons and closed-custody settings by becoming more aware of the multilayered contexts--the politics of location--that undergird their work. Seeing the "bigger picture" has implications for how and what educators teach in prison settings and, perhaps, why education works to facilitate reentry. This paper is grounded in normalization theory. Normalization theorists believe prisons can facilitate reentry when they mirror important dimensions of outside life. The performance of multiple, contextualized identities, considered here and examined in more detail in a forthcoming article, serves as an example of how educators mirror "normal" life by facilitating the performance of different roles for prisoners on the inside.

The article discusses the concept of generative AI and the challenges faced by companies in understanding and adopting this technology. It highlights the importance of direct engagement with academic experts, such as those at universities like MIT, to gain deeper insights into emerging technologies. The author emphasizes the need for C-level executives to engage directly with academic thought leaders to make informed decisions about investments in capabilities. The article also touches on the consequences of relying solely on consultants for guidance on disruptive innovations like AI. [Extracted from the article]

We study endogenous intermediation activity, the implied transaction pattern—direct trade, indirect trade, or both—and implications for efficiency. Related papers have agents exchanging indivisible goods or assets, capturing only extensive margins (trade frequency). To capture intensive margins, we incorporate divisibility representing quantity or quality. We characterize equilibrium, show how it depends on bargaining powers and costs, and how intensive margins matter—for example, middlemen with high bargaining power may charge more but offer higher quantity/quality, thus improving welfare. A tax‐subsidy policy is designed to achieve efficiency. A monetary version lets us compare money and middlemen and further discuss policy. [ABSTRACT FROM AUTHOR]

Monetary exchange is called essential when better outcomes become incentive compatible when money is introduced. We study essentiality theoretically and experimentally using finite-horizon monetary models that are naturally suited to the lab. Following mechanism design, we also study the effects of strategy recommendations both when they are incentive compatible and when they are not. Results show that output and welfare are significantly enhanced by fiat currency if monetary equilibrium exists but not otherwise. Also, recommendations help if incentive compatible but not otherwise. Sometimes money gets used when it should not, and we investigate why, using surveys and measures of social preferences. [ABSTRACT FROM AUTHOR]

Market freezes are an interesting and theoretically challenging phenomenon —they are observed empirically, but cannot occur in standard models. This paper develops a formal theory of recurrent freezes emphasizing liquidity and self‐fulfilling prophecies. While it is well understood how to get hot and cold spells, where prices and quantities fluctuate, we get asset market freezes and thaws where trade completely stops and starts. The simplest specification gets this using negative asset returns. Other specifications use information frictions or fixed costs. We also consider credit freezes, analyze the extent to which the decentralized nature of trade matters, and discuss policy implications. [ABSTRACT FROM AUTHOR]

When labor is indivisible, there exist efficient outcomes with some agents randomly unemployed (Rogerson 1988). We integrate this idea into the modern theory of monetary exchange, where some trade occurs in centralized markets and some in decentralized markets (as in Lagos and Wright 2006). This delivers a general equilibrium model of unemployment and money, with explicit microeconomic foundations. We show the implied relation between inflation and unemployment can be positive or negative, depending on simple preference conditions. Our Phillips Curve provides a long-run, exploitable, trade off for monetary policy; it turns out, however, that the optimal policy is the Freidman rule.