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Please use this identifier to cite or link to this item:
http://hdl.handle.net/2451/30283
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| Title: | Optimal Interventions in Markets with Adverse Selection |
| Authors: | Skreta, Vasiliki
Philippon, Thomas |
| Keywords: | adverse selection
market collapse
mechanism design
mechanism-dependent participation |
| Issue Date: | 21-Sep-2011 |
| Abstract: | We study the design of interventions to stabilize financial markets
plagued by adverse selection. Our contribution is to analyze the
information revealed by participation decisions. Taking part in a
government program carries a stigma, and outside options are
mechanism-dependent. We show that the effciency of an intervention can
be assessed by its impact on the market interest rate. The presence of
an outside market determines the nature of optimal interventions and the
choice of financial instruments (debt guarantees in our model), but it
does not affect implementation costs. |
| URI: | http://hdl.handle.net/2451/30283 |
| Appears in Collections: | Economics Working Papers
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